Correlation Between Bangkok Bank and BDO Unibank

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

Diversification Opportunities for Bangkok Bank and BDO Unibank

0.67

Correlation Coefficient

Bangkok Bank  BDO Unibank

Poor diversification

The 3 months correlation between Bangkok and BDO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and BDO Unibank ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank ADR 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 BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank ADR has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and BDO Unibank go up and down completely randomly.

Pair Corralation between Bangkok Bank and BDO Unibank

Assuming the 90 days horizon Bangkok Bank is expected to generate 1.94 times less return on investment than BDO Unibank. In addition to that, Bangkok Bank is 1.46 times more volatile than BDO Unibank ADR. It trades about 0.02 of its total potential returns per unit of risk. BDO Unibank ADR is currently generating about 0.06 per unit of volatility. If you would invest  1,450  in BDO Unibank ADR on September 14, 2024 and sell it today you would earn a total of  1,192  from holding BDO Unibank ADR or generate 82.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.85%
Values	Daily Returns

Bangkok Bank Public  vs.  BDO Unibank ADR

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 nearly stable basic indicators, Bangkok Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BDO Unibank ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BDO Unibank ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bangkok Bank and BDO Unibank

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

The idea behind Bangkok Bank Public and BDO Unibank ADR 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.