Correlation Between Krung Thai and Prime Road
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Prime Road 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 Prime Road 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 Prime Road Power, you can compare the effects of market volatilities on Krung Thai and Prime Road 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 Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Prime Road.
Diversification Opportunities for Krung Thai and Prime Road
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Krung and Prime is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power 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 Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of Krung Thai i.e., Krung Thai and Prime Road go up and down completely randomly.
Pair Corralation between Krung Thai and Prime Road
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.17 times more return on investment than Prime Road. However, Krung Thai Bank is 6.01 times less risky than Prime Road. It trades about 0.34 of its potential returns per unit of risk. Prime Road Power is currently generating about -0.12 per unit of risk. If you would invest 2,100 in Krung Thai Bank on November 2, 2024 and sell it today you would earn a total of 240.00 from holding Krung Thai Bank or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Krung Thai Bank vs. Prime Road Power
Performance |
| Timeline |
| Krung Thai Bank |
| Prime Road Power |
Krung Thai and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Prime Road
The main advantage of trading using opposite Krung Thai and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Prime Road 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 Prime Road will offset losses from the drop in Prime Road'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 |
| Prime Road vs. BCPG Public | Prime Road vs. CK Power Public | Prime Road vs. TPI Polene Power | Prime Road vs. Earth Tech Environment |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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