Correlation Between Krung Thai and Advanced Info

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

Diversification Opportunities for Krung Thai and Advanced Info

0.16

Correlation Coefficient

Krung Thai  Advanced Info

Average diversification

The 3 months correlation between Krung and Advanced is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service 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 Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Krung Thai i.e., Krung Thai and Advanced Info go up and down completely randomly.

Pair Corralation between Krung Thai and Advanced Info

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.87 times more return on investment than Advanced Info. However, Krung Thai Bank is 1.15 times less risky than Advanced Info. It trades about 0.15 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.03 per unit of risk. If you would invest  2,000  in Krung Thai Bank on November 29, 2024 and sell it today you would earn a total of  280.00  from holding Krung Thai Bank or generate 14.0% return on investment over 90 days.

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

Krung Thai Bank  vs.  Advanced Info Service

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 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Krung Thai disclosed solid returns over the last few months and may actually be approaching a breakup point.

Advanced Info Service

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Advanced Info is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Krung Thai and Advanced Info

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

The idea behind Krung Thai Bank and Advanced Info Service 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.