Correlation Between Standard Bank and Kasikornbank Public
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Kasikornbank Public 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 Standard Bank and Kasikornbank Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and Kasikornbank Public Co, you can compare the effects of market volatilities on Standard Bank and Kasikornbank Public 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 Standard Bank with a short position of Kasikornbank Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Kasikornbank Public.
Diversification Opportunities for Standard Bank and Kasikornbank Public
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Standard and Kasikornbank is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Kasikornbank Public Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kasikornbank Public and Standard Bank 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 Standard Bank Group are associated (or correlated) with Kasikornbank Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kasikornbank Public has no effect on the direction of Standard Bank i.e., Standard Bank and Kasikornbank Public go up and down completely randomly.
Pair Corralation between Standard Bank and Kasikornbank Public
Assuming the 90 days horizon Standard Bank is expected to generate 1.09 times less return on investment than Kasikornbank Public. But when comparing it to its historical volatility, Standard Bank Group is 1.42 times less risky than Kasikornbank Public. It trades about 0.1 of its potential returns per unit of risk. Kasikornbank Public Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,269 in Kasikornbank Public Co on August 27, 2024 and sell it today you would earn a total of 480.00 from holding Kasikornbank Public Co or generate 37.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Kasikornbank Public Co
Performance |
| Timeline |
| Standard Bank Group |
| Kasikornbank Public |
Standard Bank and Kasikornbank Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Kasikornbank Public
The main advantage of trading using opposite Standard Bank and Kasikornbank Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Kasikornbank Public 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 Kasikornbank Public will offset losses from the drop in Kasikornbank Public's long position.The idea behind Standard Bank Group and Kasikornbank Public Co 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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