Correlation Between Bangkok Airways and Bangkok Life

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

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

Diversification Opportunities for Bangkok Airways and Bangkok Life

0.72

Correlation Coefficient

Bangkok Airways  Bangkok Life

Poor diversification

The 3 months correlation between Bangkok and Bangkok is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Airways Public and Bangkok Life Assurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Life Assurance and Bangkok Airways 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 Bangkok Airways Public are associated (or correlated) with Bangkok Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Life Assurance has no effect on the direction of Bangkok Airways i.e., Bangkok Airways and Bangkok Life go up and down completely randomly.

Pair Corralation between Bangkok Airways and Bangkok Life

Assuming the 90 days horizon Bangkok Airways is expected to generate 1.87 times less return on investment than Bangkok Life. But when comparing it to its historical volatility, Bangkok Airways Public is 1.44 times less risky than Bangkok Life. It trades about 0.08 of its potential returns per unit of risk. Bangkok Life Assurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,750  in Bangkok Life Assurance on September 3, 2024 and sell it today you would earn a total of  310.00  from holding Bangkok Life Assurance or generate 17.71% return on investment over 90 days.

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

Bangkok Airways Public  vs.  Bangkok Life Assurance

Bangkok Airways Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Airways Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Bangkok Airways may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bangkok Life Assurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Life Assurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bangkok Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Airways and Bangkok Life

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

The idea behind Bangkok Airways Public and Bangkok Life Assurance 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.