Correlation Between Kiatnakin Phatra and SCB X

Can any of the company-specific risk be diversified away by investing in both Kiatnakin Phatra and SCB X 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 SCB X 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 SCB X Public, you can compare the effects of market volatilities on Kiatnakin Phatra and SCB X 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 SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kiatnakin Phatra and SCB X.

Diversification Opportunities for Kiatnakin Phatra and SCB X

0.76

Correlation Coefficient

Kiatnakin Phatra  SCB X

Poor diversification

The 3 months correlation between Kiatnakin and SCB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kiatnakin Phatra Bank and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Kiatnakin Phatra i.e., Kiatnakin Phatra and SCB X go up and down completely randomly.

Pair Corralation between Kiatnakin Phatra and SCB X

Assuming the 90 days trading horizon Kiatnakin Phatra is expected to generate 2.58 times less return on investment than SCB X. In addition to that, Kiatnakin Phatra is 1.86 times more volatile than SCB X Public. It trades about 0.02 of its total potential returns per unit of risk. SCB X Public is currently generating about 0.08 per unit of volatility. If you would invest  10,353  in SCB X Public on September 1, 2024 and sell it today you would earn a total of  1,097  from holding SCB X Public or generate 10.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Kiatnakin Phatra Bank  vs.  SCB X Public

Kiatnakin Phatra Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kiatnakin Phatra Bank are ranked lower than 9 (%) 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.

SCB X Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kiatnakin Phatra and SCB X

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

The idea behind Kiatnakin Phatra Bank and SCB X 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..