Correlation Between Bangkok Bank and BOC Hong

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

Diversification Opportunities for Bangkok Bank and BOC Hong

-0.04

Correlation Coefficient

Bangkok Bank  BOC Hong

Good diversification

The 3 months correlation between Bangkok and BOC is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank PCL and BOC Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Hong Kong 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 BOC Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Hong Kong has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and BOC Hong go up and down completely randomly.

Pair Corralation between Bangkok Bank and BOC Hong

Assuming the 90 days horizon Bangkok Bank is expected to generate 4.8 times less return on investment than BOC Hong. In addition to that, Bangkok Bank is 2.73 times more volatile than BOC Hong Kong. It trades about 0.02 of its total potential returns per unit of risk. BOC Hong Kong is currently generating about 0.22 per unit of volatility. If you would invest  6,594  in BOC Hong Kong on December 28, 2024 and sell it today you would earn a total of  1,567  from holding BOC Hong Kong or generate 23.76% return on investment over 90 days.

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

Bangkok Bank PCL  vs.  BOC Hong Kong

Bangkok Bank PCL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Bank PCL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Bangkok Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BOC Hong Kong

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BOC Hong Kong are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, BOC Hong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Bank and BOC Hong

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

The idea behind Bangkok Bank PCL and BOC Hong Kong 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.