Correlation Between Krung Thai and GULF ENERGY
Can any of the company-specific risk be diversified away by investing in both Krung Thai and GULF ENERGY 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 GULF ENERGY 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 GULF ENERGY DEVELOPMENT NVDR, you can compare the effects of market volatilities on Krung Thai and GULF ENERGY 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 GULF ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and GULF ENERGY.
Diversification Opportunities for Krung Thai and GULF ENERGY
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krung and GULF is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and GULF ENERGY DEVELOPMENT NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GULF ENERGY DEVELOPMENT 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 GULF ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GULF ENERGY DEVELOPMENT has no effect on the direction of Krung Thai i.e., Krung Thai and GULF ENERGY go up and down completely randomly.
Pair Corralation between Krung Thai and GULF ENERGY
Assuming the 90 days trading horizon Krung Thai Bank is expected to under-perform the GULF ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, Krung Thai Bank is 8.88 times less risky than GULF ENERGY. The stock trades about -0.25 of its potential returns per unit of risk. The GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,750 in GULF ENERGY DEVELOPMENT NVDR on August 30, 2024 and sell it today you would earn a total of 1,500 from holding GULF ENERGY DEVELOPMENT NVDR or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. GULF ENERGY DEVELOPMENT NVDR
Performance |
| Timeline |
| Krung Thai Bank |
| GULF ENERGY DEVELOPMENT |
Krung Thai and GULF ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and GULF ENERGY
The main advantage of trading using opposite Krung Thai and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, GULF ENERGY 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 GULF ENERGY will offset losses from the drop in GULF ENERGY'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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