Correlation Between SCB X and CIMB Thai
Can any of the company-specific risk be diversified away by investing in both SCB X and CIMB 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 SCB X and CIMB Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCB X Public and CIMB Thai Bank, you can compare the effects of market volatilities on SCB X and CIMB 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 SCB X with a short position of CIMB Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCB X and CIMB Thai.
Diversification Opportunities for SCB X and CIMB Thai
Pay attention - limited upside
The 3 months correlation between SCB and CIMB is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and CIMB Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Thai Bank and SCB X 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 SCB X Public are associated (or correlated) with CIMB Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Thai Bank has no effect on the direction of SCB X i.e., SCB X and CIMB Thai go up and down completely randomly.
Pair Corralation between SCB X and CIMB Thai
Assuming the 90 days trading horizon SCB X is expected to generate 55.69 times less return on investment than CIMB Thai. But when comparing it to its historical volatility, SCB X Public is 93.08 times less risky than CIMB Thai. It trades about 0.17 of its potential returns per unit of risk. CIMB Thai Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in CIMB Thai Bank on November 2, 2024 and sell it today you would earn a total of 49.00 from holding CIMB Thai Bank or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCB X Public vs. CIMB Thai Bank
Performance |
| Timeline |
| SCB X Public |
| CIMB Thai Bank |
SCB X and CIMB Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCB X and CIMB Thai
The main advantage of trading using opposite SCB X and CIMB Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCB X position performs unexpectedly, CIMB 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 CIMB Thai will offset losses from the drop in CIMB Thai's long position.| SCB X vs. Planet Communications Asia | SCB X vs. Hwa Fong Rubber | SCB X vs. Inoue Rubber Public | SCB X vs. ALT Telecom Public |
| CIMB Thai vs. Bank of Ayudhya | CIMB Thai vs. Krung Thai Bank | CIMB Thai vs. Kiatnakin Phatra Bank | CIMB Thai vs. Asia Aviation 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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