Correlation Between Thai Rung and Kang Yong
Can any of the company-specific risk be diversified away by investing in both Thai Rung and Kang Yong 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 Thai Rung and Kang Yong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Rung Union and Kang Yong Electric, you can compare the effects of market volatilities on Thai Rung and Kang Yong 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 Thai Rung with a short position of Kang Yong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Rung and Kang Yong.
Diversification Opportunities for Thai Rung and Kang Yong
Almost no diversification
The 3 months correlation between Thai and Kang is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Thai Rung Union and Kang Yong Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kang Yong Electric and Thai Rung 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 Thai Rung Union are associated (or correlated) with Kang Yong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kang Yong Electric has no effect on the direction of Thai Rung i.e., Thai Rung and Kang Yong go up and down completely randomly.
Pair Corralation between Thai Rung and Kang Yong
Assuming the 90 days trading horizon Thai Rung Union is expected to generate 1.79 times more return on investment than Kang Yong. However, Thai Rung is 1.79 times more volatile than Kang Yong Electric. It trades about -0.05 of its potential returns per unit of risk. Kang Yong Electric is currently generating about -0.24 per unit of risk. If you would invest 320.00 in Thai Rung Union on September 1, 2024 and sell it today you would lose (2.00) from holding Thai Rung Union or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Rung Union vs. Kang Yong Electric
Performance |
| Timeline |
| Thai Rung Union |
| Kang Yong Electric |
Thai Rung and Kang Yong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Rung and Kang Yong
The main advantage of trading using opposite Thai Rung and Kang Yong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Rung position performs unexpectedly, Kang Yong 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 Kang Yong will offset losses from the drop in Kang Yong's long position.| Thai Rung vs. TRC Construction Public | Thai Rung vs. Bangkok Expressway and | Thai Rung vs. Lohakit Metal Public | Thai Rung vs. Gunkul Engineering Public |
| Kang Yong vs. Hwa Fong Rubber | Kang Yong vs. Hana Microelectronics Public | Kang Yong vs. KGI Securities Public | Kang Yong vs. Haad Thip 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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