Correlation Between KTAM Gold and BCAP MSCI

Can any of the company-specific risk be diversified away by investing in both KTAM Gold and BCAP MSCI 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 KTAM Gold and BCAP MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KTAM Gold ETF and BCAP MSCI Thailand, you can compare the effects of market volatilities on KTAM Gold and BCAP MSCI 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 KTAM Gold with a short position of BCAP MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTAM Gold and BCAP MSCI.

Diversification Opportunities for KTAM Gold and BCAP MSCI

-0.8

Correlation Coefficient

KTAM Gold  BCAP MSCI

Pay attention - limited upside

The 3 months correlation between KTAM and BCAP is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding KTAM Gold ETF and BCAP MSCI Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCAP MSCI Thailand and KTAM Gold 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 KTAM Gold ETF are associated (or correlated) with BCAP MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCAP MSCI Thailand has no effect on the direction of KTAM Gold i.e., KTAM Gold and BCAP MSCI go up and down completely randomly.

Pair Corralation between KTAM Gold and BCAP MSCI

Assuming the 90 days trading horizon KTAM Gold ETF is expected to generate 0.65 times more return on investment than BCAP MSCI. However, KTAM Gold ETF is 1.54 times less risky than BCAP MSCI. It trades about 0.37 of its potential returns per unit of risk. BCAP MSCI Thailand is currently generating about -0.22 per unit of risk. If you would invest  360.00  in KTAM Gold ETF on December 28, 2024 and sell it today you would earn a total of  53.00  from holding KTAM Gold ETF or generate 14.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

KTAM Gold ETF  vs.  BCAP MSCI Thailand

KTAM Gold ETF

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in KTAM Gold ETF are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, KTAM Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

BCAP MSCI Thailand

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCAP MSCI Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with KTAM Gold and BCAP MSCI

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

The idea behind KTAM Gold ETF and BCAP MSCI Thailand 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.