Correlation Between Krungthai Card and Eureka Design

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

Diversification Opportunities for Krungthai Card and Eureka Design

0.13

Correlation Coefficient

Krungthai Card  Eureka Design

Average diversification

The 3 months correlation between Krungthai and Eureka is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Krungthai Card Public and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Krungthai Card i.e., Krungthai Card and Eureka Design go up and down completely randomly.

Pair Corralation between Krungthai Card and Eureka Design

Assuming the 90 days trading horizon Krungthai Card Public is expected to generate 19.05 times more return on investment than Eureka Design. However, Krungthai Card is 19.05 times more volatile than Eureka Design Public. It trades about 0.06 of its potential returns per unit of risk. Eureka Design Public is currently generating about 0.02 per unit of risk. If you would invest  5,838  in Krungthai Card Public on September 26, 2024 and sell it today you would lose (1,013) from holding Krungthai Card Public or give up 17.35% of portfolio value over 90 days.

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

Krungthai Card Public  vs.  Eureka Design 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.

Eureka Design Public

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Design Public are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Eureka Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krungthai Card and Eureka Design

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

The idea behind Krungthai Card Public and Eureka Design 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.