Correlation Between Bangkok Bank and Quality Houses

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

Diversification Opportunities for Bangkok Bank and Quality Houses

-0.43

Correlation Coefficient

Bangkok Bank  Quality Houses

Very good diversification

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

Pair Corralation between Bangkok Bank and Quality Houses

Assuming the 90 days trading horizon Bangkok Bank Public is expected to generate 1.08 times more return on investment than Quality Houses. However, Bangkok Bank is 1.08 times more volatile than Quality Houses Public. It trades about -0.01 of its potential returns per unit of risk. Quality Houses Public is currently generating about -0.17 per unit of risk. If you would invest  14,950  in Bangkok Bank Public on November 29, 2024 and sell it today you would lose (200.00) from holding Bangkok Bank Public or give up 1.34% of portfolio value over 90 days.

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

Bangkok Bank Public  vs.  Quality Houses Public

Bangkok Bank Public

Risk-Adjusted Performance

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.

Quality Houses Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Houses Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers 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 Quality Houses

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

The idea behind Bangkok Bank Public and Quality Houses 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..