Correlation Between AP Public and Krung Thai

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

By analyzing existing cross correlation between AP Public and Krung Thai Bank, you can compare the effects of market volatilities on AP Public 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 AP Public with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and Krung Thai.

Diversification Opportunities for AP Public and Krung Thai

0.17

Correlation Coefficient

AP Public  Krung Thai

Average diversification

The 3 months correlation between AP Public and Krung is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AP Public 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 AP Public 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 AP Public 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 AP Public i.e., AP Public and Krung Thai go up and down completely randomly.

Pair Corralation between AP Public and Krung Thai

Assuming the 90 days horizon AP Public is expected to generate 2.23 times less return on investment than Krung Thai. In addition to that, AP Public is 1.39 times more volatile than Krung Thai Bank. It trades about 0.06 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about 0.18 per unit of volatility. If you would invest  2,100  in Krung Thai Bank on December 30, 2024 and sell it today you would earn a total of  350.00  from holding Krung Thai Bank or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AP Public  vs.  Krung Thai Bank

AP Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, AP Public may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Krung Thai Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Krung Thai disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Public and Krung Thai

The main advantage of trading using opposite AP Public and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public 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 AP Public 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.