Correlation Between Gulf Energy and Kiatnakin Phatra

Can any of the company-specific risk be diversified away by investing in both Gulf Energy and Kiatnakin Phatra 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 Gulf Energy and Kiatnakin Phatra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gulf Energy Development and Kiatnakin Phatra Bank, you can compare the effects of market volatilities on Gulf Energy and Kiatnakin Phatra 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 Gulf Energy with a short position of Kiatnakin Phatra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and Kiatnakin Phatra.

Diversification Opportunities for Gulf Energy and Kiatnakin Phatra

-0.65

Correlation Coefficient

Gulf Energy  Kiatnakin Phatra

Excellent diversification

The 3 months correlation between Gulf and Kiatnakin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Kiatnakin Phatra Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiatnakin Phatra Bank and Gulf Energy 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 Gulf Energy Development are associated (or correlated) with Kiatnakin Phatra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiatnakin Phatra Bank has no effect on the direction of Gulf Energy i.e., Gulf Energy and Kiatnakin Phatra go up and down completely randomly.

Pair Corralation between Gulf Energy and Kiatnakin Phatra

Assuming the 90 days trading horizon Gulf Energy Development is expected to under-perform the Kiatnakin Phatra. In addition to that, Gulf Energy is 1.58 times more volatile than Kiatnakin Phatra Bank. It trades about -0.11 of its total potential returns per unit of risk. Kiatnakin Phatra Bank is currently generating about 0.18 per unit of volatility. If you would invest  5,000  in Kiatnakin Phatra Bank on November 29, 2024 and sell it today you would earn a total of  775.00  from holding Kiatnakin Phatra Bank or generate 15.5% return on investment over 90 days.

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

Gulf Energy Development  vs.  Kiatnakin Phatra Bank

Gulf Energy Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Energy Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kiatnakin Phatra Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kiatnakin Phatra Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kiatnakin Phatra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gulf Energy and Kiatnakin Phatra

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

The idea behind Gulf Energy Development and Kiatnakin Phatra Bank 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.