Correlation Between Krung Thai and Bangkok Land
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Bangkok Land 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 Land 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 Land Public, you can compare the effects of market volatilities on Krung Thai and Bangkok Land 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 Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Bangkok Land.
Diversification Opportunities for Krung Thai and Bangkok Land
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Krung and Bangkok is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Bangkok Land Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Land 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 Bangkok Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Land Public has no effect on the direction of Krung Thai i.e., Krung Thai and Bangkok Land go up and down completely randomly.
Pair Corralation between Krung Thai and Bangkok Land
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.81 times more return on investment than Bangkok Land. However, Krung Thai Bank is 1.24 times less risky than Bangkok Land. It trades about 0.25 of its potential returns per unit of risk. Bangkok Land Public is currently generating about -0.12 per unit of risk. If you would invest 2,100 in Krung Thai Bank on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Krung Thai Bank or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. Bangkok Land Public
Performance |
| Timeline |
| Krung Thai Bank |
| Bangkok Land Public |
Krung Thai and Bangkok Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Bangkok Land
The main advantage of trading using opposite Krung Thai and Bangkok Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Bangkok Land 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 Land will offset losses from the drop in Bangkok Land'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 Land vs. Siri Prime Office | Bangkok Land vs. BTS Group Holdings | Bangkok Land vs. Quality Houses Public | Bangkok Land vs. Land and Houses |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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