Correlation Between Krung Thai and Krungthai Card

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

Diversification Opportunities for Krung Thai and Krungthai Card

-0.2

Correlation Coefficient

Krung Thai  Krungthai Card

Good diversification

The 3 months correlation between Krung and Krungthai is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Krungthai Card PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krungthai Card PCL 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 Krungthai Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krungthai Card PCL has no effect on the direction of Krung Thai i.e., Krung Thai and Krungthai Card go up and down completely randomly.

Pair Corralation between Krung Thai and Krungthai Card

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 1.3 times more return on investment than Krungthai Card. However, Krung Thai is 1.3 times more volatile than Krungthai Card PCL. It trades about 0.18 of its potential returns per unit of risk. Krungthai Card PCL 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Krung Thai Bank  vs.  Krungthai Card PCL

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.

Krungthai Card PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krungthai Card PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Krung Thai and Krungthai Card

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

The idea behind Krung Thai Bank and Krungthai Card PCL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.