Correlation Between Bangchak Public and Bangkok Aviation

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

By analyzing existing cross correlation between Bangchak Public and Bangkok Aviation Fuel, you can compare the effects of market volatilities on Bangchak Public and Bangkok Aviation 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 Bangchak Public with a short position of Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangchak Public and Bangkok Aviation.

Diversification Opportunities for Bangchak Public and Bangkok Aviation

-0.76

Correlation Coefficient

Bangchak Public  Bangkok Aviation

Pay attention - limited upside

The 3 months correlation between Bangchak and Bangkok is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bangchak Public and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel and Bangchak Public 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 Bangchak Public are associated (or correlated) with Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of Bangchak Public i.e., Bangchak Public and Bangkok Aviation go up and down completely randomly.

Pair Corralation between Bangchak Public and Bangkok Aviation

Assuming the 90 days trading horizon Bangchak Public is expected to generate 1.18 times more return on investment than Bangkok Aviation. However, Bangchak Public is 1.18 times more volatile than Bangkok Aviation Fuel. It trades about 0.13 of its potential returns per unit of risk. Bangkok Aviation Fuel is currently generating about -0.24 per unit of risk. If you would invest  3,075  in Bangchak Public on November 29, 2024 and sell it today you would earn a total of  700.00  from holding Bangchak Public or generate 22.76% return on investment over 90 days.

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

Bangchak Public  vs.  Bangkok Aviation Fuel

Bangchak Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangchak Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bangchak Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bangkok Aviation Fuel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Aviation Fuel 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 forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bangchak Public and Bangkok Aviation

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

The idea behind Bangchak Public and Bangkok Aviation Fuel 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.