Correlation Between Indara Insurance and Kiatnakin Phatra

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

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

Diversification Opportunities for Indara Insurance and Kiatnakin Phatra

0.86

Correlation Coefficient

Indara Insurance  Kiatnakin Phatra

Very poor diversification

The 3 months correlation between Indara and Kiatnakin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Indara Insurance Public 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 Indara Insurance 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 Indara Insurance Public 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 Indara Insurance i.e., Indara Insurance and Kiatnakin Phatra go up and down completely randomly.

Pair Corralation between Indara Insurance and Kiatnakin Phatra

Assuming the 90 days trading horizon Indara Insurance Public is expected to generate 2.05 times more return on investment than Kiatnakin Phatra. However, Indara Insurance is 2.05 times more volatile than Kiatnakin Phatra Bank. It trades about 0.13 of its potential returns per unit of risk. Kiatnakin Phatra Bank is currently generating about 0.15 per unit of risk. If you would invest  7,575  in Indara Insurance Public on December 23, 2024 and sell it today you would earn a total of  1,825  from holding Indara Insurance Public or generate 24.09% return on investment over 90 days.

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

Indara Insurance Public  vs.  Kiatnakin Phatra Bank

Indara Insurance Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indara Insurance Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Indara Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

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 11 (%) 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 Indara Insurance and Kiatnakin Phatra

The main advantage of trading using opposite Indara Insurance and Kiatnakin Phatra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indara Insurance 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 Indara Insurance Public 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.