Correlation Between Krung Thai and Digital Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Digital Telecommunicatio 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 Digital Telecommunicatio 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 Digital Telecommunications Infrastructure, you can compare the effects of market volatilities on Krung Thai and Digital Telecommunicatio 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 Digital Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Digital Telecommunicatio.
Diversification Opportunities for Krung Thai and Digital Telecommunicatio
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Krung and Digital is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Digital Telecommunications Inf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Telecommunicatio 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 Digital Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Telecommunicatio has no effect on the direction of Krung Thai i.e., Krung Thai and Digital Telecommunicatio go up and down completely randomly.
Pair Corralation between Krung Thai and Digital Telecommunicatio
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 1.08 times more return on investment than Digital Telecommunicatio. However, Krung Thai is 1.08 times more volatile than Digital Telecommunications Infrastructure. It trades about 0.03 of its potential returns per unit of risk. Digital Telecommunications Infrastructure is currently generating about -0.03 per unit of risk. If you would invest 1,770 in Krung Thai Bank on August 24, 2024 and sell it today you would earn a total of 270.00 from holding Krung Thai Bank or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Krung Thai Bank vs. Digital Telecommunications Inf
Performance |
| Timeline |
| Krung Thai Bank |
| Digital Telecommunicatio |
Krung Thai and Digital Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Digital Telecommunicatio
The main advantage of trading using opposite Krung Thai and Digital Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Digital Telecommunicatio 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 Digital Telecommunicatio will offset losses from the drop in Digital Telecommunicatio's long position.| Krung Thai vs. The Siam Commercial | Krung Thai vs. Thai Oil Public | Krung Thai vs. Thai Union Group | Krung Thai vs. Kasikornbank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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