Correlation Between Bank of Ayudhya and AJ Plast

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

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

Diversification Opportunities for Bank of Ayudhya and AJ Plast

0.43

Correlation Coefficient

Bank of Ayudhya  AJ Plast

Very weak diversification

The 3 months correlation between Bank and AJ Plast is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public and Bank of 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 Bank of Ayudhya are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and AJ Plast go up and down completely randomly.

Pair Corralation between Bank of Ayudhya and AJ Plast

Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 297.57 times less return on investment than AJ Plast. But when comparing it to its historical volatility, Bank of Ayudhya is 80.81 times less risky than AJ Plast. It trades about 0.03 of its potential returns per unit of risk. AJ Plast Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  535.00  in AJ Plast Public on August 31, 2024 and sell it today you would lose (53.00) from holding AJ Plast Public or give up 9.91% of portfolio value over 90 days.

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

Bank of Ayudhya  vs.  AJ Plast Public

Bank of Ayudhya

Risk-Adjusted Performance

2 of 100

Weak

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

AJ Plast Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Plast Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, AJ Plast disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ayudhya and AJ Plast

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

The idea behind Bank of Ayudhya and AJ Plast Public 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.