Correlation Between Kasikornbank Public and TMBThanachart Bank

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

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

Diversification Opportunities for Kasikornbank Public and TMBThanachart Bank

0.74

Correlation Coefficient

Kasikornbank Public  TMBThanachart Bank

Poor diversification

The 3 months correlation between Kasikornbank and TMBThanachart is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public and TMBThanachart Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMBThanachart Bank Public 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 TMBThanachart Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMBThanachart Bank Public has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and TMBThanachart Bank go up and down completely randomly.

Pair Corralation between Kasikornbank Public and TMBThanachart Bank

Assuming the 90 days trading horizon Kasikornbank Public is expected to generate 0.94 times more return on investment than TMBThanachart Bank. However, Kasikornbank Public is 1.06 times less risky than TMBThanachart Bank. It trades about 0.1 of its potential returns per unit of risk. TMBThanachart Bank Public is currently generating about 0.01 per unit of risk. If you would invest  14,014  in Kasikornbank Public on September 1, 2024 and sell it today you would earn a total of  1,036  from holding Kasikornbank Public or generate 7.39% return on investment over 90 days.

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

Kasikornbank Public  vs.  TMBThanachart Bank Public

Kasikornbank Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kasikornbank Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Kasikornbank Public may actually be approaching a critical reversion point that can send shares even higher in December 2024.

TMBThanachart Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMBThanachart Bank Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, TMBThanachart Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kasikornbank Public and TMBThanachart Bank

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

The idea behind Kasikornbank Public and TMBThanachart Bank Public 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..