Correlation Between Kiatnakin Phatra and Charan Insurance

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

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

Diversification Opportunities for Kiatnakin Phatra and Charan Insurance

0.06

Correlation Coefficient

Kiatnakin Phatra  Charan Insurance

Significant diversification

The 3 months correlation between Kiatnakin and Charan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kiatnakin Phatra Bank and Charan Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charan Insurance Public and Kiatnakin Phatra 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 Kiatnakin Phatra Bank are associated (or correlated) with Charan Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charan Insurance Public has no effect on the direction of Kiatnakin Phatra i.e., Kiatnakin Phatra and Charan Insurance go up and down completely randomly.

Pair Corralation between Kiatnakin Phatra and Charan Insurance

Assuming the 90 days trading horizon Kiatnakin Phatra Bank is expected to generate 0.39 times more return on investment than Charan Insurance. However, Kiatnakin Phatra Bank is 2.54 times less risky than Charan Insurance. It trades about 0.11 of its potential returns per unit of risk. Charan Insurance Public is currently generating about -0.04 per unit of risk. If you would invest  5,025  in Kiatnakin Phatra Bank on October 22, 2024 and sell it today you would earn a total of  150.00  from holding Kiatnakin Phatra Bank or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Kiatnakin Phatra Bank  vs.  Charan Insurance Public

Kiatnakin Phatra Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Charan Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charan Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kiatnakin Phatra and Charan Insurance

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

The idea behind Kiatnakin Phatra Bank and Charan Insurance 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..