Correlation Between Banpu Public and Bangkok Bank

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

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

Diversification Opportunities for Banpu Public and Bangkok Bank

0.34

Correlation Coefficient

Banpu Public  Bangkok Bank

Weak diversification

The 3 months correlation between Banpu and Bangkok is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Banpu Public and Bangkok Bank PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank PCL and Banpu 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 Banpu Public are associated (or correlated) with Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank PCL has no effect on the direction of Banpu Public i.e., Banpu Public and Bangkok Bank go up and down completely randomly.

Pair Corralation between Banpu Public and Bangkok Bank

Assuming the 90 days trading horizon Banpu Public is expected to under-perform the Bangkok Bank. In addition to that, Banpu Public is 1.76 times more volatile than Bangkok Bank PCL. It trades about -0.24 of its total potential returns per unit of risk. Bangkok Bank PCL is currently generating about 0.0 per unit of volatility. If you would invest  15,100  in Bangkok Bank PCL on December 30, 2024 and sell it today you would lose (100.00) from holding Bangkok Bank PCL or give up 0.66% of portfolio value over 90 days.

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

Banpu Public  vs.  Bangkok Bank PCL

Banpu Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banpu Public 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bangkok Bank PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Bank PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Bangkok Bank 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 Banpu Public and Bangkok Bank

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

The idea behind Banpu Public and Bangkok Bank PCL 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.