Correlation Between Krung Thai and Kiattana Transport

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

Diversification Opportunities for Krung Thai and Kiattana Transport

-0.62

Correlation Coefficient

Krung Thai  Kiattana Transport

Excellent diversification

The 3 months correlation between Krung and Kiattana is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Kiattana Transport Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiattana Transport 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 Kiattana Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiattana Transport Public has no effect on the direction of Krung Thai i.e., Krung Thai and Kiattana Transport go up and down completely randomly.

Pair Corralation between Krung Thai and Kiattana Transport

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.62 times more return on investment than Kiattana Transport. However, Krung Thai Bank is 1.61 times less risky than Kiattana Transport. It trades about 0.16 of its potential returns per unit of risk. Kiattana Transport Public is currently generating about -0.03 per unit of risk. If you would invest  2,090  in Krung Thai Bank on December 24, 2024 and sell it today you would earn a total of  310.00  from holding Krung Thai Bank or generate 14.83% return on investment over 90 days.

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

Krung Thai Bank  vs.  Kiattana Transport Public

Krung Thai Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Krung Thai sustained solid returns over the last few months and may actually be approaching a breakup point.

Kiattana Transport Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kiattana Transport Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Kiattana Transport 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 Kiattana Transport

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

The idea behind Krung Thai Bank and Kiattana Transport 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.