Correlation Between Bangkok Bank and Namyong Terminal

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

Diversification Opportunities for Bangkok Bank and Namyong Terminal

0.7

Correlation Coefficient

Bangkok Bank  Namyong Terminal

Poor diversification

The 3 months correlation between Bangkok and Namyong is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Namyong Terminal PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyong Terminal PCL 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 Namyong Terminal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyong Terminal PCL has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Namyong Terminal go up and down completely randomly.

Pair Corralation between Bangkok Bank and Namyong Terminal

Assuming the 90 days trading horizon Bangkok Bank is expected to generate 1.19 times less return on investment than Namyong Terminal. But when comparing it to its historical volatility, Bangkok Bank Public is 1.81 times less risky than Namyong Terminal. It trades about 0.05 of its potential returns per unit of risk. Namyong Terminal PCL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Namyong Terminal PCL on September 24, 2024 and sell it today you would earn a total of  2.00  from holding Namyong Terminal PCL or generate 0.69% return on investment over 90 days.

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

Bangkok Bank Public  vs.  Namyong Terminal PCL

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.

Namyong Terminal PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Namyong Terminal PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bangkok Bank and Namyong Terminal

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

The idea behind Bangkok Bank Public and Namyong Terminal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.