Correlation Between Golden Ventures and Krungthai Card

Can any of the company-specific risk be diversified away by investing in both Golden Ventures and Krungthai Card 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 Golden Ventures and Krungthai Card into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Ventures Leasehold and Krungthai Card PCL, you can compare the effects of market volatilities on Golden Ventures and Krungthai Card 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 Golden Ventures with a short position of Krungthai Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ventures and Krungthai Card.

Diversification Opportunities for Golden Ventures and Krungthai Card

0.34

Correlation Coefficient

Golden Ventures  Krungthai Card

Weak diversification

The 3 months correlation between Golden and Krungthai is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ventures Leasehold and Krungthai Card PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krungthai Card PCL and Golden Ventures 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 Golden Ventures Leasehold are associated (or correlated) with Krungthai Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krungthai Card PCL has no effect on the direction of Golden Ventures i.e., Golden Ventures and Krungthai Card go up and down completely randomly.

Pair Corralation between Golden Ventures and Krungthai Card

Assuming the 90 days trading horizon Golden Ventures is expected to generate 8.59 times less return on investment than Krungthai Card. But when comparing it to its historical volatility, Golden Ventures Leasehold is 1.15 times less risky than Krungthai Card. It trades about 0.01 of its potential returns per unit of risk. Krungthai Card PCL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,800  in Krungthai Card PCL on December 3, 2024 and sell it today you would earn a total of  150.00  from holding Krungthai Card PCL or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Golden Ventures Leasehold  vs.  Krungthai Card PCL

Golden Ventures Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ventures Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Golden Ventures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Krungthai Card PCL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Krungthai Card PCL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Krungthai Card is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Golden Ventures and Krungthai Card

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

The idea behind Golden Ventures Leasehold and Krungthai Card 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.