Correlation Between Bangchak Public and BCPG Public

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

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

Diversification Opportunities for Bangchak Public and BCPG Public

0.62

Correlation Coefficient

Bangchak Public  BCPG Public

Poor diversification

The 3 months correlation between Bangchak and BCPG is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bangchak Public and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public 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 BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of Bangchak Public i.e., Bangchak Public and BCPG Public go up and down completely randomly.

Pair Corralation between Bangchak Public and BCPG Public

Assuming the 90 days trading horizon Bangchak Public is expected to generate 0.88 times more return on investment than BCPG Public. However, Bangchak Public is 1.14 times less risky than BCPG Public. It trades about 0.14 of its potential returns per unit of risk. BCPG Public is currently generating about 0.01 per unit of risk. If you would invest  3,075  in Bangchak Public on December 2, 2024 and sell it today you would earn a total of  775.00  from holding Bangchak Public or generate 25.2% return on investment over 90 days.

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

Bangchak Public  vs.  BCPG Public

Bangchak Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bangchak Public are ranked lower than 11 (%) 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.

BCPG Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCPG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, BCPG Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bangchak Public and BCPG Public

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

The idea behind Bangchak Public and BCPG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.