Correlation Between Krung Thai and Bangkok Dusit
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Bangkok Dusit 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 Krung Thai and Bangkok Dusit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krung Thai Bank and Bangkok Dusit Medical, you can compare the effects of market volatilities on Krung Thai and Bangkok Dusit 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 Krung Thai with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Bangkok Dusit.
Diversification Opportunities for Krung Thai and Bangkok Dusit
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Krung and Bangkok is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Krung 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 Krung Thai Bank are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Krung Thai i.e., Krung Thai and Bangkok Dusit go up and down completely randomly.
Pair Corralation between Krung Thai and Bangkok Dusit
Assuming the 90 days trading horizon Krung Thai is expected to generate 105.51 times less return on investment than Bangkok Dusit. But when comparing it to its historical volatility, Krung Thai Bank is 49.59 times less risky than Bangkok Dusit. It trades about 0.03 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,000 in Bangkok Dusit Medical on August 30, 2024 and sell it today you would lose (425.00) from holding Bangkok Dusit Medical or give up 14.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. Bangkok Dusit Medical
Performance |
| Timeline |
| Krung Thai Bank |
| Bangkok Dusit Medical |
Krung Thai and Bangkok Dusit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Bangkok Dusit
The main advantage of trading using opposite Krung Thai and Bangkok Dusit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Bangkok Dusit 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 Bangkok Dusit will offset losses from the drop in Bangkok Dusit's long position.| Krung Thai vs. The Siam Commercial | Krung Thai vs. Thai Oil Public | Krung Thai vs. Kasikornbank Public | Krung Thai vs. The Siam Cement |
| Bangkok Dusit vs. Syntec Construction Public | Bangkok Dusit vs. Quality Construction Products | Bangkok Dusit vs. Turnkey Communication Services | Bangkok Dusit vs. CHUWIT FARM 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |