Correlation Between Krungthai Card and President Bakery

Can any of the company-specific risk be diversified away by investing in both Krungthai Card and President Bakery 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 Krungthai Card and President Bakery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Krungthai Card Public and President Bakery Public, you can compare the effects of market volatilities on Krungthai Card and President Bakery 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 Krungthai Card with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krungthai Card and President Bakery.

Diversification Opportunities for Krungthai Card and President Bakery

0.27

Correlation Coefficient

Krungthai Card  President Bakery

Modest diversification

The 3 months correlation between Krungthai and President is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Krungthai Card Public and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and Krungthai Card 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 Krungthai Card Public are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Krungthai Card i.e., Krungthai Card and President Bakery go up and down completely randomly.

Pair Corralation between Krungthai Card and President Bakery

Assuming the 90 days trading horizon Krungthai Card Public is expected to generate 149.34 times more return on investment than President Bakery. However, Krungthai Card is 149.34 times more volatile than President Bakery Public. It trades about 0.12 of its potential returns per unit of risk. President Bakery Public is currently generating about 0.0 per unit of risk. If you would invest  4,688  in Krungthai Card Public on October 12, 2024 and sell it today you would earn a total of  287.00  from holding Krungthai Card Public or generate 6.12% return on investment over 90 days.

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

Krungthai Card Public  vs.  President Bakery Public

Krungthai Card Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krungthai Card Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Krungthai Card sustained solid returns over the last few months and may actually be approaching a breakup point.

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery 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 Krungthai Card and President Bakery

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

The idea behind Krungthai Card Public and President Bakery 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.