Correlation Between China Merchants and Krung Thai
Can any of the company-specific risk be diversified away by investing in both China Merchants 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 China Merchants and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Bank and Krung Thai Bank, you can compare the effects of market volatilities on China Merchants 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 China Merchants with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Krung Thai.
Diversification Opportunities for China Merchants and Krung Thai
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Krung is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank 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 China Merchants 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 China Merchants Bank 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 China Merchants i.e., China Merchants and Krung Thai go up and down completely randomly.
Pair Corralation between China Merchants and Krung Thai
Assuming the 90 days horizon China Merchants Bank is expected to generate 4.64 times more return on investment than Krung Thai. However, China Merchants is 4.64 times more volatile than Krung Thai Bank. It trades about 0.1 of its potential returns per unit of risk. Krung Thai Bank is currently generating about 0.14 per unit of risk. If you would invest 206.00 in China Merchants Bank on September 3, 2024 and sell it today you would earn a total of 217.00 from holding China Merchants Bank or generate 105.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Krung Thai Bank
Performance |
| Timeline |
| China Merchants Bank |
| Krung Thai Bank |
China Merchants and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Krung Thai
The main advantage of trading using opposite China Merchants and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants 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.| China Merchants vs. Air New Zealand | China Merchants vs. MYFAIR GOLD P | China Merchants vs. SEI INVESTMENTS | China Merchants vs. ECHO INVESTMENT ZY |
| Krung Thai vs. China Merchants Bank | Krung Thai vs. PT Bank Central | Krung Thai vs. DBS Group Holdings | Krung Thai vs. State Bank of |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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