Correlation Between Thai Rubber and Bangkok Sheet

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

By analyzing existing cross correlation between Thai Rubber Latex and Bangkok Sheet Metal, you can compare the effects of market volatilities on Thai Rubber and Bangkok Sheet 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 Thai Rubber with a short position of Bangkok Sheet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Rubber and Bangkok Sheet.

Diversification Opportunities for Thai Rubber and Bangkok Sheet

0.6

Correlation Coefficient

Thai Rubber  Bangkok Sheet

Poor diversification

The 3 months correlation between Thai and Bangkok is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thai Rubber Latex and Bangkok Sheet Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Sheet Metal and Thai Rubber 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 Thai Rubber Latex are associated (or correlated) with Bangkok Sheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Sheet Metal has no effect on the direction of Thai Rubber i.e., Thai Rubber and Bangkok Sheet go up and down completely randomly.

Pair Corralation between Thai Rubber and Bangkok Sheet

Assuming the 90 days trading horizon Thai Rubber Latex is expected to under-perform the Bangkok Sheet. In addition to that, Thai Rubber is 1.49 times more volatile than Bangkok Sheet Metal. It trades about -0.16 of its total potential returns per unit of risk. Bangkok Sheet Metal is currently generating about -0.09 per unit of volatility. If you would invest  301.00  in Bangkok Sheet Metal on December 29, 2024 and sell it today you would lose (35.00) from holding Bangkok Sheet Metal or give up 11.63% of portfolio value over 90 days.

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

Thai Rubber Latex  vs.  Bangkok Sheet Metal

Thai Rubber Latex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Rubber Latex 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bangkok Sheet Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Sheet Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Thai Rubber and Bangkok Sheet

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

The idea behind Thai Rubber Latex and Bangkok Sheet Metal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.