Correlation Between Bangkok Bank and Samchai Steel

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

By analyzing existing cross correlation between Bangkok Bank PCL and Samchai Steel Industries, you can compare the effects of market volatilities on Bangkok Bank and Samchai Steel 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 Samchai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Bank and Samchai Steel.

Diversification Opportunities for Bangkok Bank and Samchai Steel

0.34

Correlation Coefficient

Bangkok Bank  Samchai Steel

Weak diversification

The 3 months correlation between Bangkok and Samchai is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank PCL and Samchai Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samchai Steel Industries 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 PCL are associated (or correlated) with Samchai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samchai Steel Industries has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Samchai Steel go up and down completely randomly.

Pair Corralation between Bangkok Bank and Samchai Steel

Assuming the 90 days trading horizon Bangkok Bank PCL is expected to generate 0.29 times more return on investment than Samchai Steel. However, Bangkok Bank PCL is 3.4 times less risky than Samchai Steel. It trades about 0.0 of its potential returns per unit of risk. Samchai Steel Industries is currently generating about -0.11 per unit of risk. If you would invest  15,100  in Bangkok Bank PCL on December 28, 2024 and sell it today you would lose (100.00) from holding Bangkok Bank PCL or give up 0.66% of portfolio value over 90 days.

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

Bangkok Bank PCL  vs.  Samchai Steel Industries

Bangkok Bank PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Bank PCL 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.

Samchai Steel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samchai Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bangkok Bank and Samchai Steel

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

The idea behind Bangkok Bank PCL and Samchai Steel Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.