Correlation Between Krung Thai and Thoresen Thai

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

Diversification Opportunities for Krung Thai and Thoresen Thai

-0.18

Correlation Coefficient

Krung Thai  Thoresen Thai

Good diversification

The 3 months correlation between Krung and Thoresen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Thoresen Thai Agencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoresen Thai Agencies 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 Thoresen Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoresen Thai Agencies has no effect on the direction of Krung Thai i.e., Krung Thai and Thoresen Thai go up and down completely randomly.

Pair Corralation between Krung Thai and Thoresen Thai

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.51 times more return on investment than Thoresen Thai. However, Krung Thai Bank is 1.97 times less risky than Thoresen Thai. It trades about 0.13 of its potential returns per unit of risk. Thoresen Thai Agencies is currently generating about -0.09 per unit of risk. If you would invest  1,710  in Krung Thai Bank on September 29, 2024 and sell it today you would earn a total of  400.00  from holding Krung Thai Bank or generate 23.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Krung Thai Bank  vs.  Thoresen Thai Agencies

Krung Thai Bank

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Krung Thai is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Thoresen Thai Agencies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thoresen Thai Agencies 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Krung Thai and Thoresen Thai

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

The idea behind Krung Thai Bank and Thoresen Thai Agencies 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 Transaction History module to view history of all your transactions and understand their impact on performance.