Correlation Between Lam Soon and Bangkok Ranch
Can any of the company-specific risk be diversified away by investing in both Lam Soon and Bangkok Ranch 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 Lam Soon and Bangkok Ranch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Soon Public and Bangkok Ranch PCL, you can compare the effects of market volatilities on Lam Soon and Bangkok Ranch 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 Lam Soon with a short position of Bangkok Ranch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Soon and Bangkok Ranch.
Diversification Opportunities for Lam Soon and Bangkok Ranch
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lam and Bangkok is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lam Soon Public and Bangkok Ranch PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Ranch PCL and Lam Soon 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 Lam Soon Public are associated (or correlated) with Bangkok Ranch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Ranch PCL has no effect on the direction of Lam Soon i.e., Lam Soon and Bangkok Ranch go up and down completely randomly.
Pair Corralation between Lam Soon and Bangkok Ranch
Assuming the 90 days trading horizon Lam Soon Public is expected to generate 2.62 times more return on investment than Bangkok Ranch. However, Lam Soon is 2.62 times more volatile than Bangkok Ranch PCL. It trades about 0.09 of its potential returns per unit of risk. Bangkok Ranch PCL is currently generating about -0.12 per unit of risk. If you would invest 486.00 in Lam Soon Public on August 24, 2024 and sell it today you would earn a total of 10.00 from holding Lam Soon Public or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lam Soon Public vs. Bangkok Ranch PCL
Performance |
| Timeline |
| Lam Soon Public |
| Bangkok Ranch PCL |
Lam Soon and Bangkok Ranch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Soon and Bangkok Ranch
The main advantage of trading using opposite Lam Soon and Bangkok Ranch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Soon position performs unexpectedly, Bangkok Ranch 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 Ranch will offset losses from the drop in Bangkok Ranch's long position.| Lam Soon vs. CP ALL Public | Lam Soon vs. Carabao Group Public | Lam Soon vs. Thai Union Group | Lam Soon vs. Minor International Public |
| Bangkok Ranch vs. GFPT Public | Bangkok Ranch vs. Asian Sea | Bangkok Ranch vs. Buriram Sugar Public | Bangkok Ranch vs. Ichitan Group Public |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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