Correlation Between Bangkok Bank and Asia Aviation

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

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

Diversification Opportunities for Bangkok Bank and Asia Aviation

-0.66

Correlation Coefficient

Bangkok Bank  Asia Aviation

Excellent diversification

The 3 months correlation between Bangkok and Asia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Asia Aviation Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Aviation Public and Bangkok Bank 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 Bank Public are associated (or correlated) with Asia Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Aviation Public has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Asia Aviation go up and down completely randomly.

Pair Corralation between Bangkok Bank and Asia Aviation

Assuming the 90 days trading horizon Bangkok Bank Public is expected to generate 0.43 times more return on investment than Asia Aviation. However, Bangkok Bank Public is 2.3 times less risky than Asia Aviation. It trades about 0.16 of its potential returns per unit of risk. Asia Aviation Public is currently generating about -0.12 per unit of risk. If you would invest  14,700  in Bangkok Bank Public on September 27, 2024 and sell it today you would earn a total of  350.00  from holding Bangkok Bank Public or generate 2.38% return on investment over 90 days.

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

Bangkok Bank Public  vs.  Asia Aviation Public

Bangkok Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Bank Public 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Asia Aviation Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Asia Aviation 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 Bangkok Bank and Asia Aviation

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

The idea behind Bangkok Bank Public and Asia Aviation 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..