Correlation Between KRUNG THAI and Bangkok Bank
Can any of the company-specific risk be diversified away by investing in both KRUNG THAI and Bangkok 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 Bangkok Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRUNG THAI FGN and Bangkok Bank Public, you can compare the effects of market volatilities on KRUNG THAI and Bangkok 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 Bangkok Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRUNG THAI and Bangkok Bank.
Diversification Opportunities for KRUNG THAI and Bangkok Bank
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 FGN and Bangkok Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok 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 FGN are associated (or correlated) with Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank Public has no effect on the direction of KRUNG THAI i.e., KRUNG THAI and Bangkok Bank go up and down completely randomly.
Pair Corralation between KRUNG THAI and Bangkok Bank
Assuming the 90 days trading horizon KRUNG THAI FGN is expected to generate 0.82 times more return on investment than Bangkok Bank. However, KRUNG THAI FGN is 1.22 times less risky than Bangkok Bank. It trades about 0.26 of its potential returns per unit of risk. Bangkok Bank Public is currently generating about 0.01 per unit of risk. If you would invest 60.00 in KRUNG THAI FGN on November 8, 2024 and sell it today you would earn a total of 5.00 from holding KRUNG THAI FGN or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
KRUNG THAI FGN vs. Bangkok Bank Public
Performance |
| Timeline |
| KRUNG THAI FGN |
| Bangkok Bank Public |
KRUNG THAI and Bangkok Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRUNG THAI and Bangkok Bank
The main advantage of trading using opposite KRUNG THAI and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRUNG THAI position performs unexpectedly, Bangkok 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 Bangkok Bank will offset losses from the drop in Bangkok Bank's long position.| KRUNG THAI vs. China Merchants Bank | KRUNG THAI vs. HDFC Bank Limited | KRUNG THAI vs. ICICI Bank Limited | KRUNG THAI vs. PT Bank Central |
| Bangkok Bank vs. China Merchants Bank | Bangkok Bank vs. HDFC Bank Limited | Bangkok Bank vs. ICICI Bank Limited | Bangkok Bank vs. PT Bank Central |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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