Correlation Between Rojana Industrial and Krung Thai
Can any of the company-specific risk be diversified away by investing in both Rojana Industrial 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 Rojana Industrial and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rojana Industrial Park and Krung Thai Bank, you can compare the effects of market volatilities on Rojana Industrial 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 Rojana Industrial with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rojana Industrial and Krung Thai.
Diversification Opportunities for Rojana Industrial and Krung Thai
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rojana and Krung is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rojana Industrial Park 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 Rojana Industrial 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 Rojana Industrial Park 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 Rojana Industrial i.e., Rojana Industrial and Krung Thai go up and down completely randomly.
Pair Corralation between Rojana Industrial and Krung Thai
Assuming the 90 days trading horizon Rojana Industrial is expected to generate 1.11 times less return on investment than Krung Thai. In addition to that, Rojana Industrial is 1.72 times more volatile than Krung Thai Bank. It trades about 0.02 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about 0.04 per unit of volatility. If you would invest 1,600 in Krung Thai Bank on August 30, 2024 and sell it today you would earn a total of 380.00 from holding Krung Thai Bank or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rojana Industrial Park vs. Krung Thai Bank
Performance |
| Timeline |
| Rojana Industrial Park |
| Krung Thai Bank |
Rojana Industrial and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rojana Industrial and Krung Thai
The main advantage of trading using opposite Rojana Industrial and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rojana Industrial 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.The idea behind Rojana Industrial Park and Krung Thai Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Krung Thai vs. Bangkok Bank Public | Krung Thai vs. SCB X Public | Krung Thai vs. Kasikornbank Public | Krung Thai vs. PTT 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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