Correlation Between BPS TECHNOLOGY and Thai Credit

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

By analyzing existing cross correlation between BPS TECHNOLOGY PUBLIC and Thai Credit Pcl, you can compare the effects of market volatilities on BPS TECHNOLOGY and Thai Credit 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 BPS TECHNOLOGY with a short position of Thai Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Thai Credit.

Diversification Opportunities for BPS TECHNOLOGY and Thai Credit

0.67

Correlation Coefficient

BPS TECHNOLOGY  Thai Credit

Poor diversification

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

Pair Corralation between BPS TECHNOLOGY and Thai Credit

Assuming the 90 days trading horizon BPS TECHNOLOGY is expected to generate 26.27 times less return on investment than Thai Credit. But when comparing it to its historical volatility, BPS TECHNOLOGY PUBLIC is 1.08 times less risky than Thai Credit. It trades about 0.01 of its potential returns per unit of risk. Thai Credit Pcl is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Thai Credit Pcl on October 24, 2024 and sell it today you would earn a total of  270.00  from holding Thai Credit Pcl or generate 15.79% return on investment over 90 days.

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

BPS TECHNOLOGY PUBLIC  vs.  Thai Credit Pcl

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BPS TECHNOLOGY PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Credit Pcl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Credit Pcl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 BPS TECHNOLOGY and Thai Credit

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

The idea behind BPS TECHNOLOGY PUBLIC and Thai Credit Pcl 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.