Correlation Between Sahamit Machinery and Krung Thai

Can any of the company-specific risk be diversified away by investing in both Sahamit Machinery and Krung 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 Sahamit Machinery and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sahamit Machinery Public and Krung Thai Bank, you can compare the effects of market volatilities on Sahamit Machinery and Krung 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 Sahamit Machinery with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sahamit Machinery and Krung Thai.

Diversification Opportunities for Sahamit Machinery and Krung Thai

-0.3

Correlation Coefficient

Sahamit Machinery  Krung Thai

Very good diversification

The 3 months correlation between Sahamit and Krung is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sahamit Machinery Public and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank and Sahamit Machinery 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 Sahamit Machinery Public are associated (or correlated) with Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of Sahamit Machinery i.e., Sahamit Machinery and Krung Thai go up and down completely randomly.

Pair Corralation between Sahamit Machinery and Krung Thai

Assuming the 90 days trading horizon Sahamit Machinery Public is expected to under-perform the Krung Thai. But the stock apears to be less risky and, when comparing its historical volatility, Sahamit Machinery Public is 1.73 times less risky than Krung Thai. The stock trades about -0.17 of its potential returns per unit of risk. The Krung Thai Bank is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,160  in Krung Thai Bank on October 13, 2024 and sell it today you would earn a total of  10.00  from holding Krung Thai Bank or generate 0.46% return on investment over 90 days.

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

Sahamit Machinery Public  vs.  Krung Thai Bank

Sahamit Machinery Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Krung Thai Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krung Thai Bank has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Sahamit Machinery and Krung Thai

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

The idea behind Sahamit Machinery Public and Krung Thai Bank 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.