Correlation Between Charan Insurance and Bangkok Bank

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

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

Diversification Opportunities for Charan Insurance and Bangkok Bank

-0.07

Correlation Coefficient

Charan Insurance  Bangkok Bank

Good diversification

The 3 months correlation between Charan and Bangkok is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Charan Insurance Public 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 Charan Insurance 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 Charan Insurance Public 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 Charan Insurance i.e., Charan Insurance and Bangkok Bank go up and down completely randomly.

Pair Corralation between Charan Insurance and Bangkok Bank

Assuming the 90 days trading horizon Charan Insurance Public is expected to under-perform the Bangkok Bank. In addition to that, Charan Insurance is 2.9 times more volatile than Bangkok Bank Public. It trades about -0.09 of its total potential returns per unit of risk. Bangkok Bank Public is currently generating about 0.14 per unit of volatility. If you would invest  14,650  in Bangkok Bank Public on October 7, 2024 and sell it today you would earn a total of  600.00  from holding Bangkok Bank Public or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Charan Insurance Public  vs.  Bangkok Bank Public

Charan Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charan Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charan Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 Charan Insurance and Bangkok Bank

The main advantage of trading using opposite Charan Insurance and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charan Insurance 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 Charan Insurance Public 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.