Correlation Between CIMB Thai and MFC Asset
Can any of the company-specific risk be diversified away by investing in both CIMB Thai and MFC Asset 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 MFC Asset 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 MFC Asset Management, you can compare the effects of market volatilities on CIMB Thai and MFC Asset 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 MFC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMB Thai and MFC Asset.
Diversification Opportunities for CIMB Thai and MFC Asset
Excellent diversification
The 3 months correlation between CIMB and MFC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CIMB Thai Bank and MFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Asset Management 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 MFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Asset Management has no effect on the direction of CIMB Thai i.e., CIMB Thai and MFC Asset go up and down completely randomly.
Pair Corralation between CIMB Thai and MFC Asset
Assuming the 90 days trading horizon CIMB Thai Bank is expected to generate 1.1 times more return on investment than MFC Asset. However, CIMB Thai is 1.1 times more volatile than MFC Asset Management. It trades about 0.4 of its potential returns per unit of risk. MFC Asset Management is currently generating about -0.23 per unit of risk. If you would invest 50.00 in CIMB Thai Bank on December 4, 2024 and sell it today you would earn a total of 12.00 from holding CIMB Thai Bank or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIMB Thai Bank vs. MFC Asset Management
Performance |
| Timeline |
| CIMB Thai Bank |
| MFC Asset Management |
CIMB Thai and MFC Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIMB Thai and MFC Asset
The main advantage of trading using opposite CIMB Thai and MFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIMB Thai position performs unexpectedly, MFC Asset 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 MFC Asset will offset losses from the drop in MFC Asset'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 |
| MFC Asset vs. KGI Securities Public | MFC Asset vs. Lam Soon Public | MFC Asset vs. Lalin Property Public | MFC Asset vs. Hwa Fong Rubber |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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