Correlation Between Krung Thai and Aikchol Hospital

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

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

Diversification Opportunities for Krung Thai and Aikchol Hospital

-0.68

Correlation Coefficient

Krung Thai  Aikchol Hospital

Excellent diversification

The 3 months correlation between Krung and Aikchol is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Aikchol Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aikchol Hospital Public and Krung Thai 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 Krung Thai Bank are associated (or correlated) with Aikchol Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aikchol Hospital Public has no effect on the direction of Krung Thai i.e., Krung Thai and Aikchol Hospital go up and down completely randomly.

Pair Corralation between Krung Thai and Aikchol Hospital

Assuming the 90 days trading horizon Krung Thai is expected to generate 35.96 times less return on investment than Aikchol Hospital. But when comparing it to its historical volatility, Krung Thai Bank is 66.36 times less risky than Aikchol Hospital. It trades about 0.15 of its potential returns per unit of risk. Aikchol Hospital Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Aikchol Hospital Public on October 26, 2024 and sell it today you would lose (70.00) from holding Aikchol Hospital Public or give up 4.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Krung Thai Bank  vs.  Aikchol Hospital Public

Krung Thai Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Krung Thai may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aikchol Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Krung Thai and Aikchol Hospital

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

The idea behind Krung Thai Bank and Aikchol Hospital 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 Anywhere module to track or share privately all of your investments from the convenience of any device.