Correlation Between Krung Thai and AEON Thana

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

Diversification Opportunities for Krung Thai and AEON Thana

-0.65

Correlation Coefficient

Krung Thai  AEON Thana

Excellent diversification

The 3 months correlation between Krung and AEON is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and AEON Thana Sinsap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON Thana Sinsap 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 AEON Thana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON Thana Sinsap has no effect on the direction of Krung Thai i.e., Krung Thai and AEON Thana go up and down completely randomly.

Pair Corralation between Krung Thai and AEON Thana

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.69 times more return on investment than AEON Thana. However, Krung Thai Bank is 1.46 times less risky than AEON Thana. It trades about 0.18 of its potential returns per unit of risk. AEON Thana Sinsap is currently generating about -0.12 per unit of risk. If you would invest  2,100  in Krung Thai Bank on December 30, 2024 and sell it today you would earn a total of  350.00  from holding Krung Thai Bank or generate 16.67% 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.  AEON Thana Sinsap

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 14 (%) 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.

AEON Thana Sinsap

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEON Thana Sinsap 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Krung Thai and AEON Thana

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

The idea behind Krung Thai Bank and AEON Thana Sinsap 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.