Correlation Between GM and Krungthai Card
Can any of the company-specific risk be diversified away by investing in both GM and Krungthai Card 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 GM and Krungthai Card into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Krungthai Card PCL, you can compare the effects of market volatilities on GM and Krungthai Card 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 GM with a short position of Krungthai Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Krungthai Card.
Diversification Opportunities for GM and Krungthai Card
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Krungthai is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Krungthai Card PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krungthai Card PCL and GM 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 General Motors are associated (or correlated) with Krungthai Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krungthai Card PCL has no effect on the direction of GM i.e., GM and Krungthai Card go up and down completely randomly.
Pair Corralation between GM and Krungthai Card
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.73 times more return on investment than Krungthai Card. However, GM is 1.73 times more volatile than Krungthai Card PCL. It trades about 0.14 of its potential returns per unit of risk. Krungthai Card PCL is currently generating about -0.2 per unit of risk. If you would invest 5,292 in General Motors on August 24, 2024 and sell it today you would earn a total of 276.00 from holding General Motors or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Krungthai Card PCL
Performance |
| Timeline |
| General Motors |
| Krungthai Card PCL |
GM and Krungthai Card Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Krungthai Card
The main advantage of trading using opposite GM and Krungthai Card positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Krungthai Card 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 Krungthai Card will offset losses from the drop in Krungthai Card's long position.The idea behind General Motors and Krungthai Card PCL 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.| Krungthai Card vs. Krung Thai Bank | Krungthai Card vs. SCB X Public | Krungthai Card vs. Bangkok Bank Public | Krungthai Card vs. PTT 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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