Correlation Between Krung Thai and Bangkok Life
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Bangkok Life 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 Life 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 Life Assurance, you can compare the effects of market volatilities on Krung Thai and Bangkok Life 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 Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Bangkok Life.
Diversification Opportunities for Krung Thai and Bangkok Life
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Krung and Bangkok is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Bangkok Life Assurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Life Assurance 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 Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Life Assurance has no effect on the direction of Krung Thai i.e., Krung Thai and Bangkok Life go up and down completely randomly.
Pair Corralation between Krung Thai and Bangkok Life
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.59 times more return on investment than Bangkok Life. However, Krung Thai Bank is 1.69 times less risky than Bangkok Life. It trades about 0.04 of its potential returns per unit of risk. Bangkok Life Assurance is currently generating about -0.02 per unit of risk. If you would invest 1,600 in Krung Thai Bank on August 29, 2024 and sell it today you would earn a total of 400.00 from holding Krung Thai Bank or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. Bangkok Life Assurance
Performance |
| Timeline |
| Krung Thai Bank |
| Bangkok Life Assurance |
Krung Thai and Bangkok Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Bangkok Life
The main advantage of trading using opposite Krung Thai and Bangkok Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Bangkok Life 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 Life will offset losses from the drop in Bangkok Life's long position.| Krung Thai vs. Bangkok Bank Public | Krung Thai vs. SCB X Public | Krung Thai vs. Kasikornbank Public | Krung Thai vs. PTT Public |
| Bangkok Life vs. Karmarts Public | Bangkok Life vs. Kang Yong Electric | Bangkok Life vs. Kiatnakin Phatra Bank | Bangkok Life vs. SCG PACKAGING PCL NVDR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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