Correlation Between Bangkok Bank and Charan Insurance

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

Diversification Opportunities for Bangkok Bank and Charan Insurance

-0.07

Correlation Coefficient

Bangkok Bank  Charan Insurance

Good diversification

The 3 months correlation between Bangkok and Charan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Charan Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charan Insurance 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 Charan Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charan Insurance Public has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Charan Insurance go up and down completely randomly.

Pair Corralation between Bangkok Bank and Charan Insurance

Assuming the 90 days trading horizon Bangkok Bank Public is expected to generate 0.45 times more return on investment than Charan Insurance. However, Bangkok Bank Public is 2.24 times less risky than Charan Insurance. It trades about 0.0 of its potential returns per unit of risk. Charan Insurance Public is currently generating about -0.05 per unit of risk. If you would invest  15,300  in Bangkok Bank Public on October 7, 2024 and sell it today you would lose (50.00) from holding Bangkok Bank Public or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Bangkok Bank Public  vs.  Charan Insurance 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Charan Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charan Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charan Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Bank and Charan Insurance

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

The idea behind Bangkok Bank Public and Charan Insurance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.