Correlation Between Earth Tech and CIMB Thai
Can any of the company-specific risk be diversified away by investing in both Earth Tech and CIMB 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 Earth Tech and CIMB Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earth Tech Environment and CIMB Thai Bank, you can compare the effects of market volatilities on Earth Tech and CIMB 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 Earth Tech with a short position of CIMB Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earth Tech and CIMB Thai.
Diversification Opportunities for Earth Tech and CIMB Thai
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Earth and CIMB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Earth Tech Environment and CIMB Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Thai Bank and Earth Tech 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 Earth Tech Environment are associated (or correlated) with CIMB Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Thai Bank has no effect on the direction of Earth Tech i.e., Earth Tech and CIMB Thai go up and down completely randomly.
Pair Corralation between Earth Tech and CIMB Thai
Assuming the 90 days trading horizon Earth Tech is expected to generate 1.02 times less return on investment than CIMB Thai. In addition to that, Earth Tech is 1.0 times more volatile than CIMB Thai Bank. It trades about 0.04 of its total potential returns per unit of risk. CIMB Thai Bank is currently generating about 0.04 per unit of volatility. 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 |
Earth Tech Environment vs. CIMB Thai Bank
Performance |
| Timeline |
| Earth Tech Environment |
| CIMB Thai Bank |
Earth Tech and CIMB Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earth Tech and CIMB Thai
The main advantage of trading using opposite Earth Tech and CIMB Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earth Tech position performs unexpectedly, CIMB 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 CIMB Thai will offset losses from the drop in CIMB Thai's long position.| Earth Tech vs. Gulf Energy Development | Earth Tech vs. Energy Absolute Public | Earth Tech vs. Gunkul Engineering Public | Earth Tech vs. Global Power Synergy |
| CIMB Thai vs. Bank of Ayudhya | CIMB Thai vs. Krung Thai Bank | CIMB Thai vs. Kiatnakin Phatra Bank | CIMB Thai vs. Asia Aviation Public |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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