Correlation Between Krung Thai and President Automobile
Can any of the company-specific risk be diversified away by investing in both Krung Thai and President Automobile 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 President Automobile 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 President Automobile Industries, you can compare the effects of market volatilities on Krung Thai and President Automobile 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 President Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and President Automobile.
Diversification Opportunities for Krung Thai and President Automobile
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krung and President is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile 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 President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of Krung Thai i.e., Krung Thai and President Automobile go up and down completely randomly.
Pair Corralation between Krung Thai and President Automobile
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.51 times more return on investment than President Automobile. However, Krung Thai Bank is 1.96 times less risky than President Automobile. It trades about -0.14 of its potential returns per unit of risk. President Automobile Industries is currently generating about -0.14 per unit of risk. If you would invest 2,050 in Krung Thai Bank on September 1, 2024 and sell it today you would lose (50.00) from holding Krung Thai Bank or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. President Automobile Industrie
Performance |
| Timeline |
| Krung Thai Bank |
| President Automobile |
Krung Thai and President Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and President Automobile
The main advantage of trading using opposite Krung Thai and President Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, President Automobile 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 President Automobile will offset losses from the drop in President Automobile'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 |
| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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