Correlation Between Chevron Corp and Bangkok Bank

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

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

Diversification Opportunities for Chevron Corp and Bangkok Bank

0.02

Correlation Coefficient

Chevron Corp  Bangkok Bank

Significant diversification

The 3 months correlation between Chevron and Bangkok is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp 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 Chevron Corp 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 Chevron Corp 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 Chevron Corp i.e., Chevron Corp and Bangkok Bank go up and down completely randomly.

Pair Corralation between Chevron Corp and Bangkok Bank

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.53 times more return on investment than Bangkok Bank. However, Chevron Corp is 1.89 times less risky than Bangkok Bank. It trades about -0.19 of its potential returns per unit of risk. Bangkok Bank Public is currently generating about -0.22 per unit of risk. If you would invest  15,524  in Chevron Corp on October 7, 2024 and sell it today you would lose (739.00) from holding Chevron Corp or give up 4.76% of portfolio value over 90 days.

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

Chevron Corp  vs.  Bangkok Bank Public

Chevron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The recent 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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chevron Corp and Bangkok Bank

The main advantage of trading using opposite Chevron Corp and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp 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 Chevron Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.