Correlation Between Kasikornbank Public and Bank of the Philippine Is
Can any of the company-specific risk be diversified away by investing in both Kasikornbank Public and Bank of the Philippine Is 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 Kasikornbank Public and Bank of the Philippine Is into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kasikornbank Public Co and Bank of the, you can compare the effects of market volatilities on Kasikornbank Public and Bank of the Philippine Is 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 Kasikornbank Public with a short position of Bank of the Philippine Is. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kasikornbank Public and Bank of the Philippine Is.
Diversification Opportunities for Kasikornbank Public and Bank of the Philippine Is
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kasikornbank and Bank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public Co and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is and Kasikornbank Public 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 Kasikornbank Public Co are associated (or correlated) with Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and Bank of the Philippine Is go up and down completely randomly.
Pair Corralation between Kasikornbank Public and Bank of the Philippine Is
Assuming the 90 days horizon Kasikornbank Public Co is expected to generate 0.96 times more return on investment than Bank of the Philippine Is. However, Kasikornbank Public Co is 1.04 times less risky than Bank of the Philippine Is. It trades about -0.09 of its potential returns per unit of risk. Bank of the is currently generating about -0.13 per unit of risk. If you would invest 1,823 in Kasikornbank Public Co on August 27, 2024 and sell it today you would lose (128.00) from holding Kasikornbank Public Co or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kasikornbank Public Co vs. Bank of the
Performance |
| Timeline |
| Kasikornbank Public |
| Bank of the Philippine Is |
Kasikornbank Public and Bank of the Philippine Is Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kasikornbank Public and Bank of the Philippine Is
The main advantage of trading using opposite Kasikornbank Public and Bank of the Philippine Is positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kasikornbank Public position performs unexpectedly, Bank of the Philippine Is 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 Bank of the Philippine Is will offset losses from the drop in Bank of the Philippine Is' long position.The idea behind Kasikornbank Public Co and Bank of the 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.| Bank of the Philippine Is vs. BOC Hong Kong | Bank of the Philippine Is vs. China Merchants Bank | Bank of the Philippine Is vs. BDO Unibank ADR | Bank of the Philippine Is vs. United Security Bancshares |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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