Correlation Between CIMB Thai and SCB X

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

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

Diversification Opportunities for CIMB Thai and SCB X

0.38

Correlation Coefficient

CIMB Thai  SCB X

Weak diversification

The 3 months correlation between CIMB and SCB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CIMB Thai Bank and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public and CIMB Thai 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 CIMB Thai Bank are associated (or correlated) with SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of CIMB Thai i.e., CIMB Thai and SCB X go up and down completely randomly.

Pair Corralation between CIMB Thai and SCB X

Assuming the 90 days trading horizon CIMB Thai Bank is expected to generate 2.47 times more return on investment than SCB X. However, CIMB Thai is 2.47 times more volatile than SCB X Public. It trades about 0.39 of its potential returns per unit of risk. SCB X Public is currently generating about 0.12 per unit of risk. If you would invest  44.00  in CIMB Thai Bank on December 20, 2024 and sell it today you would earn a total of  34.00  from holding CIMB Thai Bank or generate 77.27% return on investment over 90 days.

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

CIMB Thai Bank  vs.  SCB X Public

CIMB Thai Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CIMB Thai Bank are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, CIMB Thai sustained solid returns over the last few months and may actually be approaching a breakup point.

SCB X Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CIMB Thai and SCB X

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

The idea behind CIMB Thai Bank and SCB X 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.