Correlation Between Krung Thai and Lotus Retail
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Lotus Retail 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 Lotus Retail 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 Lotus Retail Growth, you can compare the effects of market volatilities on Krung Thai and Lotus Retail 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 Lotus Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Lotus Retail.
Diversification Opportunities for Krung Thai and Lotus Retail
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Krung and Lotus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Lotus Retail Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Retail Growth 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 Lotus Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Retail Growth has no effect on the direction of Krung Thai i.e., Krung Thai and Lotus Retail go up and down completely randomly.
Pair Corralation between Krung Thai and Lotus Retail
Assuming the 90 days trading horizon Krung Thai is expected to generate 2.08 times less return on investment than Lotus Retail. In addition to that, Krung Thai is 1.09 times more volatile than Lotus Retail Growth. It trades about 0.01 of its total potential returns per unit of risk. Lotus Retail Growth is currently generating about 0.03 per unit of volatility. If you would invest 1,148 in Lotus Retail Growth on August 31, 2024 and sell it today you would earn a total of 122.00 from holding Lotus Retail Growth or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.35% |
| Values | Daily Returns |
Krung Thai Bank vs. Lotus Retail Growth
Performance |
| Timeline |
| Krung Thai Bank |
| Lotus Retail Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Krung Thai and Lotus Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Lotus Retail
The main advantage of trading using opposite Krung Thai and Lotus Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Lotus Retail 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 Lotus Retail will offset losses from the drop in Lotus Retail'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 |
| Lotus Retail vs. CPN Retail Growth | Lotus Retail vs. Ticon Freehold and | Lotus Retail vs. WHA Premium Growth | Lotus Retail vs. Major Cineplex Lifestyle |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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