Correlation Between Eastern Star and Bangkok Land

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

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

Diversification Opportunities for Eastern Star and Bangkok Land

0.93

Correlation Coefficient

Eastern Star  Bangkok Land

Almost no diversification

The 3 months correlation between Eastern and Bangkok is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Star Real and Bangkok Land Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Land Public and Eastern Star 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 Eastern Star Real are associated (or correlated) with Bangkok Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Land Public has no effect on the direction of Eastern Star i.e., Eastern Star and Bangkok Land go up and down completely randomly.

Pair Corralation between Eastern Star and Bangkok Land

Assuming the 90 days trading horizon Eastern Star Real is expected to generate 1.0 times more return on investment than Bangkok Land. However, Eastern Star Real is 1.0 times less risky than Bangkok Land. It trades about 0.11 of its potential returns per unit of risk. Bangkok Land Public is currently generating about 0.11 per unit of risk. If you would invest  21.00  in Eastern Star Real on September 2, 2024 and sell it today you would earn a total of  2.00  from holding Eastern Star Real or generate 9.52% return on investment over 90 days.

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

Eastern Star Real  vs.  Bangkok Land Public

Eastern Star Real

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Star Real are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Eastern Star sustained solid returns over the last few months and may actually be approaching a breakup point.

Bangkok Land Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Land Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Bangkok Land sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern Star and Bangkok Land

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

The idea behind Eastern Star Real and Bangkok Land 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.

Check out your portfolio center.

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.