Correlation Between Bangkok Bank and Tipco Foods

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

Diversification Opportunities for Bangkok Bank and Tipco Foods

0.18

Correlation Coefficient

Bangkok Bank  Tipco Foods

Average diversification

The 3 months correlation between Bangkok and Tipco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Tipco Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tipco Foods 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 Tipco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tipco Foods Public has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Tipco Foods go up and down completely randomly.

Pair Corralation between Bangkok Bank and Tipco Foods

Assuming the 90 days trading horizon Bangkok Bank is expected to generate 63.34 times less return on investment than Tipco Foods. But when comparing it to its historical volatility, Bangkok Bank Public is 72.04 times less risky than Tipco Foods. It trades about 0.09 of its potential returns per unit of risk. Tipco Foods Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Tipco Foods Public on October 8, 2024 and sell it today you would earn a total of  10.00  from holding Tipco Foods Public or generate 1.0% return on investment over 90 days.

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

Bangkok Bank Public  vs.  Tipco Foods 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.

Tipco Foods Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tipco Foods Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Tipco Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Bank and Tipco Foods

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

The idea behind Bangkok Bank Public and Tipco Foods 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.