Correlation Between Kasikornbank Public and Com7 PCL

Can any of the company-specific risk be diversified away by investing in both Kasikornbank Public and Com7 PCL 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 Kasikornbank Public and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kasikornbank Public and Com7 PCL, you can compare the effects of market volatilities on Kasikornbank Public and Com7 PCL 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 Kasikornbank Public with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kasikornbank Public and Com7 PCL.

Diversification Opportunities for Kasikornbank Public and Com7 PCL

-0.2

Correlation Coefficient

Kasikornbank Public  Com7 PCL

Good diversification

The 3 months correlation between Kasikornbank and Com7 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and Kasikornbank Public 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 Kasikornbank Public are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and Com7 PCL go up and down completely randomly.

Pair Corralation between Kasikornbank Public and Com7 PCL

Assuming the 90 days trading horizon Kasikornbank Public is expected to generate 0.53 times more return on investment than Com7 PCL. However, Kasikornbank Public is 1.9 times less risky than Com7 PCL. It trades about 0.03 of its potential returns per unit of risk. Com7 PCL is currently generating about -0.01 per unit of risk. If you would invest  13,804  in Kasikornbank Public on September 26, 2024 and sell it today you would earn a total of  1,646  from holding Kasikornbank Public or generate 11.92% return on investment over 90 days.

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

Kasikornbank Public  vs.  Com7 PCL

Kasikornbank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kasikornbank Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Kasikornbank Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Com7 PCL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Com7 PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kasikornbank Public and Com7 PCL

The main advantage of trading using opposite Kasikornbank Public and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kasikornbank Public position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.

The idea behind Kasikornbank Public and Com7 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.