Correlation Between Swedbank and Bangkok Bank

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

By analyzing existing cross correlation between Swedbank AB and Bangkok Bank PCL, you can compare the effects of market volatilities on Swedbank and Bangkok Bank 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 Swedbank with a short position of Bangkok Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Bangkok Bank.

Diversification Opportunities for Swedbank and Bangkok Bank

0.01

Correlation Coefficient

Swedbank  Bangkok Bank

Significant diversification

The 3 months correlation between Swedbank and Bangkok is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Bangkok Bank PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank PCL and Swedbank 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 Swedbank AB are associated (or correlated) with Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank PCL has no effect on the direction of Swedbank i.e., Swedbank and Bangkok Bank go up and down completely randomly.

Pair Corralation between Swedbank and Bangkok Bank

Assuming the 90 days horizon Swedbank AB is expected to generate 0.47 times more return on investment than Bangkok Bank. However, Swedbank AB is 2.12 times less risky than Bangkok Bank. It trades about 0.2 of its potential returns per unit of risk. Bangkok Bank PCL is currently generating about 0.03 per unit of risk. If you would invest  1,810  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  529.00  from holding Swedbank AB or generate 29.23% return on investment over 90 days.

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

Swedbank AB  vs.  Bangkok Bank PCL

Swedbank AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Swedbank showed solid returns over the last few months and may actually be approaching a breakup point.

Bangkok Bank PCL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Bank PCL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Bangkok Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Swedbank and Bangkok Bank

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

The idea behind Swedbank AB and Bangkok Bank 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..