Correlation Between Bangkok Bank and Community West

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

Diversification Opportunities for Bangkok Bank and Community West

0.06

Correlation Coefficient

Bangkok Bank  Community West

Significant diversification

The 3 months correlation between Bangkok and Community is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank PCL and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares 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 Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Community West go up and down completely randomly.

Pair Corralation between Bangkok Bank and Community West

Assuming the 90 days horizon Bangkok Bank PCL is expected to generate 3.58 times more return on investment than Community West. However, Bangkok Bank is 3.58 times more volatile than Community West Bancshares. It trades about 0.03 of its potential returns per unit of risk. Community West Bancshares is currently generating about -0.05 per unit of risk. If you would invest  2,214  in Bangkok Bank PCL on December 30, 2024 and sell it today you would earn a total of  53.00  from holding Bangkok Bank PCL or generate 2.39% return on investment over 90 days.

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

Bangkok Bank PCL  vs.  Community West Bancshares

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 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Bangkok Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Community West Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community West Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Community West is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bangkok Bank and Community West

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

The idea behind Bangkok Bank PCL and Community West Bancshares 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 Commodity Directory module to find actively traded commodities issued by global exchanges.