Correlation Between Krung Thai and TMBThanachart Bank
Can any of the company-specific risk be diversified away by investing in both Krung Thai and TMBThanachart Bank 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 TMBThanachart Bank 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 TMBThanachart Bank Public, you can compare the effects of market volatilities on Krung Thai and TMBThanachart Bank 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 TMBThanachart Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and TMBThanachart Bank.
Diversification Opportunities for Krung Thai and TMBThanachart Bank
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Krung and TMBThanachart is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and TMBThanachart Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMBThanachart Bank Public 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 TMBThanachart Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMBThanachart Bank Public has no effect on the direction of Krung Thai i.e., Krung Thai and TMBThanachart Bank go up and down completely randomly.
Pair Corralation between Krung Thai and TMBThanachart Bank
Assuming the 90 days trading horizon Krung Thai is expected to generate 3.3 times less return on investment than TMBThanachart Bank. But when comparing it to its historical volatility, Krung Thai Bank is 1.05 times less risky than TMBThanachart Bank. It trades about 0.02 of its potential returns per unit of risk. TMBThanachart Bank Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 141.00 in TMBThanachart Bank Public on August 28, 2024 and sell it today you would earn a total of 40.00 from holding TMBThanachart Bank Public or generate 28.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Krung Thai Bank vs. TMBThanachart Bank Public
Performance |
| Timeline |
| Krung Thai Bank |
| TMBThanachart Bank Public |
Krung Thai and TMBThanachart Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and TMBThanachart Bank
The main advantage of trading using opposite Krung Thai and TMBThanachart Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, TMBThanachart Bank 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 TMBThanachart Bank will offset losses from the drop in TMBThanachart Bank's long position.| Krung Thai vs. Supalai Public | Krung Thai vs. Thai Oil Public | Krung Thai vs. The Erawan Group | Krung Thai vs. Ditto Public |
| TMBThanachart Bank vs. TISCO Financial Group | TMBThanachart Bank vs. Krung Thai Bank | TMBThanachart Bank vs. Kasikornbank Public | TMBThanachart Bank vs. SCB X 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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