Correlation Between LH Financial and Krung Thai
Can any of the company-specific risk be diversified away by investing in both LH Financial and Krung Thai 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 LH Financial and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LH Financial Group and Krung Thai Bank, you can compare the effects of market volatilities on LH Financial and Krung Thai 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 LH Financial with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of LH Financial and Krung Thai.
Diversification Opportunities for LH Financial and Krung Thai
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LHFG and Krung is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LH Financial Group and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank and LH Financial 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 LH Financial Group are associated (or correlated) with Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of LH Financial i.e., LH Financial and Krung Thai go up and down completely randomly.
Pair Corralation between LH Financial and Krung Thai
Assuming the 90 days trading horizon LH Financial Group is expected to under-perform the Krung Thai. But the stock apears to be less risky and, when comparing its historical volatility, LH Financial Group is 1.09 times less risky than Krung Thai. The stock trades about -0.04 of its potential returns per unit of risk. The Krung Thai Bank is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Krung Thai Bank on October 31, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LH Financial Group vs. Krung Thai Bank
Performance |
| Timeline |
| LH Financial Group |
| Krung Thai Bank |
LH Financial and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LH Financial and Krung Thai
The main advantage of trading using opposite LH Financial and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LH Financial position performs unexpectedly, Krung Thai 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 Krung Thai will offset losses from the drop in Krung Thai's long position.| LH Financial vs. Quality Houses Public | LH Financial vs. Kiatnakin Phatra Bank | LH Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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