Correlation Between TMBThanachart Bank and Bangkok Bank

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

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

Diversification Opportunities for TMBThanachart Bank and Bangkok Bank

0.54

Correlation Coefficient

TMBThanachart Bank  Bangkok Bank

Very weak diversification

The 3 months correlation between TMBThanachart and Bangkok is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding TMBThanachart Bank Public and Bangkok Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank Public and TMBThanachart Bank 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 TMBThanachart Bank Public 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 Public has no effect on the direction of TMBThanachart Bank i.e., TMBThanachart Bank and Bangkok Bank go up and down completely randomly.

Pair Corralation between TMBThanachart Bank and Bangkok Bank

Assuming the 90 days trading horizon TMBThanachart Bank Public is expected to generate 1.01 times more return on investment than Bangkok Bank. However, TMBThanachart Bank is 1.01 times more volatile than Bangkok Bank Public. It trades about 0.13 of its potential returns per unit of risk. Bangkok Bank Public is currently generating about 0.02 per unit of risk. If you would invest  177.00  in TMBThanachart Bank Public on December 1, 2024 and sell it today you would earn a total of  17.00  from holding TMBThanachart Bank Public or generate 9.6% return on investment over 90 days.

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

TMBThanachart Bank Public  vs.  Bangkok Bank Public

TMBThanachart Bank Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TMBThanachart Bank Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, TMBThanachart Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bangkok Bank Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Bank Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Bangkok Bank 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 TMBThanachart Bank and Bangkok Bank

The main advantage of trading using opposite TMBThanachart Bank and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMBThanachart Bank 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 TMBThanachart Bank Public and Bangkok Bank 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.