Correlation Between CIMB Thai and Earth Tech
Can any of the company-specific risk be diversified away by investing in both CIMB Thai and Earth Tech 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 CIMB Thai and Earth Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIMB Thai Bank and Earth Tech Environment, you can compare the effects of market volatilities on CIMB Thai and Earth Tech 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 CIMB Thai with a short position of Earth Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMB Thai and Earth Tech.
Diversification Opportunities for CIMB Thai and Earth Tech
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between CIMB and Earth is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CIMB Thai Bank and Earth Tech Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earth Tech Environment and CIMB Thai 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 CIMB Thai Bank are associated (or correlated) with Earth Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earth Tech Environment has no effect on the direction of CIMB Thai i.e., CIMB Thai and Earth Tech go up and down completely randomly.
Pair Corralation between CIMB Thai and Earth Tech
Assuming the 90 days trading horizon CIMB Thai Bank is expected to generate 1.0 times more return on investment than Earth Tech. However, CIMB Thai Bank is 1.0 times less risky than Earth Tech. It trades about 0.04 of its potential returns per unit of risk. Earth Tech Environment is currently generating about 0.04 per unit of risk. If you would invest 82.00 in CIMB Thai Bank on September 14, 2024 and sell it today you would lose (35.00) from holding CIMB Thai Bank or give up 42.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIMB Thai Bank vs. Earth Tech Environment
Performance |
| Timeline |
| CIMB Thai Bank |
| Earth Tech Environment |
CIMB Thai and Earth Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIMB Thai and Earth Tech
The main advantage of trading using opposite CIMB Thai and Earth Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIMB Thai position performs unexpectedly, Earth Tech 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 Earth Tech will offset losses from the drop in Earth Tech's long position.| CIMB Thai vs. Bank of Ayudhya | CIMB Thai vs. Krung Thai Bank | CIMB Thai vs. Kiatnakin Phatra Bank | CIMB Thai vs. Asia Aviation Public |
| Earth Tech vs. Gulf Energy Development | Earth Tech vs. Energy Absolute Public | Earth Tech vs. Gunkul Engineering Public | Earth Tech vs. Global Power Synergy |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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