Correlation Between Bangkok Life and Bangkok Bank

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

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

Diversification Opportunities for Bangkok Life and Bangkok Bank

-0.21

Correlation Coefficient

Bangkok Life  Bangkok Bank

Very good diversification

The 3 months correlation between Bangkok and Bangkok is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Life Assurance and Bangkok Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank Public and Bangkok Life 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 Life Assurance are associated (or correlated) with Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank Public has no effect on the direction of Bangkok Life i.e., Bangkok Life and Bangkok Bank go up and down completely randomly.

Pair Corralation between Bangkok Life and Bangkok Bank

Assuming the 90 days trading horizon Bangkok Life Assurance is expected to generate 2.97 times more return on investment than Bangkok Bank. However, Bangkok Life is 2.97 times more volatile than Bangkok Bank Public. It trades about 0.03 of its potential returns per unit of risk. Bangkok Bank Public is currently generating about -0.07 per unit of risk. If you would invest  2,000  in Bangkok Life Assurance on September 14, 2024 and sell it today you would earn a total of  60.00  from holding Bangkok Life Assurance or generate 3.0% return on investment over 90 days.

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

Bangkok Life Assurance  vs.  Bangkok Bank Public

Bangkok Life Assurance

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Life Assurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bangkok Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 quite persistent essential indicators, Bangkok Bank 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 Bangkok Life and Bangkok Bank

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

The idea behind Bangkok Life Assurance and Bangkok Bank 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.