Correlation Between Bangkok Ranch and Kaset Thai
Can any of the company-specific risk be diversified away by investing in both Bangkok Ranch and Kaset Thai at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bangkok Ranch and Kaset Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bangkok Ranch PCL and Kaset Thai International, you can compare the effects of market volatilities on Bangkok Ranch and Kaset Thai and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bangkok Ranch with a short position of Kaset Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Ranch and Kaset Thai.
Diversification Opportunities for Bangkok Ranch and Kaset Thai
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bangkok and Kaset is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Ranch PCL and Kaset Thai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaset Thai International and Bangkok Ranch is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bangkok Ranch PCL are associated (or correlated) with Kaset Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaset Thai International has no effect on the direction of Bangkok Ranch i.e., Bangkok Ranch and Kaset Thai go up and down completely randomly.
Pair Corralation between Bangkok Ranch and Kaset Thai
Assuming the 90 days horizon Bangkok Ranch PCL is expected to under-perform the Kaset Thai. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Ranch PCL is 3.3 times less risky than Kaset Thai. The stock trades about -0.06 of its potential returns per unit of risk. The Kaset Thai International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Kaset Thai International on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Kaset Thai International or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bangkok Ranch PCL vs. Kaset Thai International
Performance |
| Timeline |
| Bangkok Ranch PCL |
| Kaset Thai International |
Bangkok Ranch and Kaset Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bangkok Ranch and Kaset Thai
The main advantage of trading using opposite Bangkok Ranch and Kaset Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Ranch position performs unexpectedly, Kaset Thai can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kaset Thai will offset losses from the drop in Kaset Thai's long position.The idea behind Bangkok Ranch PCL and Kaset Thai International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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