Correlation Between Community West and Bangkok Bank

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

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

Diversification Opportunities for Community West and Bangkok Bank

-0.09

Correlation Coefficient

Community West  Bangkok Bank

Good diversification

The 3 months correlation between Community and Bangkok is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Bangkok Bank PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank PCL and Community West 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 Community West Bancshares 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 PCL has no effect on the direction of Community West i.e., Community West and Bangkok Bank go up and down completely randomly.

Pair Corralation between Community West and Bangkok Bank

Given the investment horizon of 90 days Community West Bancshares is expected to under-perform the Bangkok Bank. But the stock apears to be less risky and, when comparing its historical volatility, Community West Bancshares is 3.61 times less risky than Bangkok Bank. The stock trades about -0.19 of its potential returns per unit of risk. The Bangkok Bank PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,310  in Bangkok Bank PCL on November 28, 2024 and sell it today you would earn a total of  96.00  from holding Bangkok Bank PCL or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Community West Bancshares  vs.  Bangkok Bank PCL

Community West Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community West Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bangkok Bank PCL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Bank PCL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Bangkok Bank may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Community West and Bangkok Bank

The main advantage of trading using opposite Community West and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West 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 Community West Bancshares and Bangkok Bank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.