Correlation Between Bangkok Commercial and Gulf Energy

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

By analyzing existing cross correlation between Bangkok Commercial Asset and Gulf Energy Development, you can compare the effects of market volatilities on Bangkok Commercial and Gulf Energy 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 Commercial with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Commercial and Gulf Energy.

Diversification Opportunities for Bangkok Commercial and Gulf Energy

-0.14

Correlation Coefficient

Bangkok Commercial  Gulf Energy

Good diversification

The 3 months correlation between Bangkok and Gulf is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Commercial Asset and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and Bangkok Commercial 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 Commercial Asset are associated (or correlated) with Gulf Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Energy Development has no effect on the direction of Bangkok Commercial i.e., Bangkok Commercial and Gulf Energy go up and down completely randomly.

Pair Corralation between Bangkok Commercial and Gulf Energy

Assuming the 90 days trading horizon Bangkok Commercial Asset is expected to generate 1.17 times more return on investment than Gulf Energy. However, Bangkok Commercial is 1.17 times more volatile than Gulf Energy Development. It trades about -0.03 of its potential returns per unit of risk. Gulf Energy Development is currently generating about -0.14 per unit of risk. If you would invest  680.00  in Bangkok Commercial Asset on December 2, 2024 and sell it today you would lose (45.00) from holding Bangkok Commercial Asset or give up 6.62% of portfolio value over 90 days.

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

Bangkok Commercial Asset  vs.  Gulf Energy Development

Bangkok Commercial Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Commercial Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Bangkok Commercial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gulf Energy Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Energy Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bangkok Commercial and Gulf Energy

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

The idea behind Bangkok Commercial Asset and Gulf Energy Development 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.