Correlation Between Kasikornbank Public and HMN Financial

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

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

Diversification Opportunities for Kasikornbank Public and HMN Financial

0.25

Correlation Coefficient

Kasikornbank Public  HMN Financial

Modest diversification

The 3 months correlation between Kasikornbank and HMN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public Co and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial 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 Co are associated (or correlated) with HMN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMN Financial has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and HMN Financial go up and down completely randomly.

Pair Corralation between Kasikornbank Public and HMN Financial

Assuming the 90 days horizon Kasikornbank Public is expected to generate 1.46 times less return on investment than HMN Financial. In addition to that, Kasikornbank Public is 1.17 times more volatile than HMN Financial. It trades about 0.02 of its total potential returns per unit of risk. HMN Financial is currently generating about 0.04 per unit of volatility. If you would invest  2,142  in HMN Financial on October 3, 2024 and sell it today you would earn a total of  657.00  from holding HMN Financial or generate 30.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.34%
Values	Daily Returns

Kasikornbank Public Co  vs.  HMN Financial

Kasikornbank Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kasikornbank Public Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Kasikornbank Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HMN Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days HMN Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, HMN Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kasikornbank Public and HMN Financial

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

The idea behind Kasikornbank Public Co and HMN Financial 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 Anywhere module to track or share privately all of your investments from the convenience of any device.