Correlation Between Kiatnakin Phatra and TRC Construction

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

Diversification Opportunities for Kiatnakin Phatra and TRC Construction

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Kiatnakin and TRC is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kiatnakin Phatra Bank and TRC Construction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRC Construction 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 TRC Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRC Construction Public has no effect on the direction of Kiatnakin Phatra i.e., Kiatnakin Phatra and TRC Construction go up and down completely randomly.

Pair Corralation between Kiatnakin Phatra and TRC Construction

Assuming the 90 days trading horizon Kiatnakin Phatra Bank is expected to generate 0.18 times more return on investment than TRC Construction. However, Kiatnakin Phatra Bank is 5.45 times less risky than TRC Construction. It trades about 0.09 of its potential returns per unit of risk. TRC Construction Public is currently generating about -0.11 per unit of risk. If you would invest  5,250  in Kiatnakin Phatra Bank on December 30, 2024 and sell it today you would earn a total of  425.00  from holding Kiatnakin Phatra Bank or generate 8.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Kiatnakin Phatra Bank  vs.  TRC Construction Public

 Performance 
       Timeline  
Kiatnakin Phatra Bank 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kiatnakin Phatra Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kiatnakin Phatra may actually be approaching a critical reversion point that can send shares even higher in April 2025.
TRC Construction Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days TRC Construction Public 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 indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kiatnakin Phatra and TRC Construction Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kiatnakin Phatra and TRC Construction

The main advantage of trading using opposite Kiatnakin Phatra and TRC Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kiatnakin Phatra position performs unexpectedly, TRC Construction 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 TRC Construction will offset losses from the drop in TRC Construction's long position.
The idea behind Kiatnakin Phatra Bank and TRC Construction 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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