Correlation Between Bangkok Commercial and Heng Leasing

Can any of the company-specific risk be diversified away by investing in both Bangkok Commercial and Heng Leasing 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 Heng Leasing 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 Heng Leasing Capital, you can compare the effects of market volatilities on Bangkok Commercial and Heng Leasing 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 Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Commercial and Heng Leasing.

Diversification Opportunities for Bangkok Commercial and Heng Leasing

0.91

Correlation Coefficient

Bangkok Commercial  Heng Leasing

Almost no diversification

The 3 months correlation between Bangkok and Heng is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Commercial Asset and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital 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 Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of Bangkok Commercial i.e., Bangkok Commercial and Heng Leasing go up and down completely randomly.

Pair Corralation between Bangkok Commercial and Heng Leasing

Assuming the 90 days trading horizon Bangkok Commercial Asset is expected to generate 0.9 times more return on investment than Heng Leasing. However, Bangkok Commercial Asset is 1.11 times less risky than Heng Leasing. It trades about -0.33 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.42 per unit of risk. If you would invest  785.00  in Bangkok Commercial Asset on September 3, 2024 and sell it today you would lose (110.00) from holding Bangkok Commercial Asset or give up 14.01% of portfolio value over 90 days.

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

Bangkok Commercial Asset  vs.  Heng Leasing Capital

Bangkok Commercial Asset

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bangkok Commercial and Heng Leasing

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

The idea behind Bangkok Commercial Asset and Heng Leasing Capital 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.