Correlation Between Allianz Ayudhya and Bangkok Union

Can any of the company-specific risk be diversified away by investing in both Allianz Ayudhya and Bangkok Union 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 Allianz Ayudhya and Bangkok Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianz Ayudhya Capital and Bangkok Union Insurance, you can compare the effects of market volatilities on Allianz Ayudhya and Bangkok Union 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 Allianz Ayudhya with a short position of Bangkok Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Ayudhya and Bangkok Union.

Diversification Opportunities for Allianz Ayudhya and Bangkok Union

-0.49

Correlation Coefficient

Allianz Ayudhya  Bangkok Union

Very good diversification

The 3 months correlation between Allianz and Bangkok is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Ayudhya Capital and Bangkok Union Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Union Insurance and Allianz Ayudhya 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 Allianz Ayudhya Capital are associated (or correlated) with Bangkok Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Union Insurance has no effect on the direction of Allianz Ayudhya i.e., Allianz Ayudhya and Bangkok Union go up and down completely randomly.

Pair Corralation between Allianz Ayudhya and Bangkok Union

Assuming the 90 days trading horizon Allianz Ayudhya is expected to generate 1.11 times less return on investment than Bangkok Union. But when comparing it to its historical volatility, Allianz Ayudhya Capital is 1.01 times less risky than Bangkok Union. It trades about 0.04 of its potential returns per unit of risk. Bangkok Union Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,209  in Bangkok Union Insurance on October 10, 2024 and sell it today you would earn a total of  391.00  from holding Bangkok Union Insurance or generate 32.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allianz Ayudhya Capital  vs.  Bangkok Union Insurance

Allianz Ayudhya Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz Ayudhya Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Allianz Ayudhya is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bangkok Union Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Union Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Bangkok Union is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Allianz Ayudhya and Bangkok Union

The main advantage of trading using opposite Allianz Ayudhya and Bangkok Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz Ayudhya position performs unexpectedly, Bangkok Union 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 Bangkok Union will offset losses from the drop in Bangkok Union's long position.

The idea behind Allianz Ayudhya Capital and Bangkok Union Insurance 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.