Correlation Between Absa Group and Kasikornbank Public

Can any of the company-specific risk be diversified away by investing in both Absa Group 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 Absa Group and Kasikornbank Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absa Group Ltd and Kasikornbank Public Co, you can compare the effects of market volatilities on Absa Group 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 Absa Group with a short position of Kasikornbank Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Kasikornbank Public.

Diversification Opportunities for Absa Group and Kasikornbank Public

0.44

Correlation Coefficient

Absa Group  Kasikornbank Public

Very weak diversification

The 3 months correlation between Absa and Kasikornbank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Ltd and Kasikornbank Public Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kasikornbank Public and Absa Group 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 Absa Group Ltd 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 Absa Group i.e., Absa Group and Kasikornbank Public go up and down completely randomly.

Pair Corralation between Absa Group and Kasikornbank Public

Assuming the 90 days horizon Absa Group Ltd is expected to under-perform the Kasikornbank Public. But the pink sheet apears to be less risky and, when comparing its historical volatility, Absa Group Ltd is 2.24 times less risky than Kasikornbank Public. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Kasikornbank Public Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,797  in Kasikornbank Public Co on October 11, 2024 and sell it today you would lose (56.00) from holding Kasikornbank Public Co or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Absa Group Ltd  vs.  Kasikornbank Public Co

Absa Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Absa Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kasikornbank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kasikornbank Public Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kasikornbank Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absa Group and Kasikornbank Public

The main advantage of trading using opposite Absa Group and Kasikornbank Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group 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 Absa Group Ltd 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.