Correlation Between Bangkok Life and Thaire Life

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

Diversification Opportunities for Bangkok Life and Thaire Life

0.13

Correlation Coefficient

Bangkok Life  Thaire Life

Average diversification

The 3 months correlation between Bangkok and Thaire is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Life Assurance and Thaire Life Assurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thaire Life Assurance 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 Thaire Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thaire Life Assurance has no effect on the direction of Bangkok Life i.e., Bangkok Life and Thaire Life go up and down completely randomly.

Pair Corralation between Bangkok Life and Thaire Life

Assuming the 90 days trading horizon Bangkok Life Assurance is expected to under-perform the Thaire Life. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Life Assurance is 1.35 times less risky than Thaire Life. The stock trades about -0.07 of its potential returns per unit of risk. The Thaire Life Assurance is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Thaire Life Assurance on December 31, 2024 and sell it today you would lose (5.00) from holding Thaire Life Assurance or give up 3.23% of portfolio value over 90 days.

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

Bangkok Life Assurance  vs.  Thaire Life Assurance

Bangkok Life Assurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Life Assurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Thaire Life Assurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thaire Life Assurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Thaire Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Life and Thaire Life

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

The idea behind Bangkok Life Assurance and Thaire Life Assurance 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.