Correlation Between KGI Securities and CIMB Thai

Can any of the company-specific risk be diversified away by investing in both KGI Securities and CIMB Thai 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 KGI Securities and CIMB Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for KGI Securities and CIMB Thai

0.75

Correlation Coefficient

KGI Securities  CIMB Thai

Poor diversification

The 3 months correlation between KGI and CIMB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KGI Securities Public and CIMB Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Thai Bank and KGI Securities 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 KGI Securities Public are associated (or correlated) with CIMB Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Thai Bank has no effect on the direction of KGI Securities i.e., KGI Securities and CIMB Thai go up and down completely randomly.

Pair Corralation between KGI Securities and CIMB Thai

Assuming the 90 days trading horizon KGI Securities Public is expected to under-perform the CIMB Thai. But the stock apears to be less risky and, when comparing its historical volatility, KGI Securities Public is 77.99 times less risky than CIMB Thai. The stock trades about -0.04 of its potential returns per unit of risk. The CIMB Thai Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  59.00  in CIMB Thai Bank on October 22, 2024 and sell it today you would lose (19.00) from holding CIMB Thai Bank or give up 32.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.54%
Values	Daily Returns

KGI Securities Public  vs.  CIMB Thai Bank

KGI Securities Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KGI Securities Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CIMB Thai Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMB Thai Bank 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 fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KGI Securities and CIMB Thai

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

The idea behind KGI Securities Public and CIMB Thai 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.