Correlation Between Eureka Design and Krungthai Card

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

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

Diversification Opportunities for Eureka Design and Krungthai Card

0.13

Correlation Coefficient

Eureka Design  Krungthai Card

Average diversification

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

Pair Corralation between Eureka Design and Krungthai Card

Assuming the 90 days trading horizon Eureka Design Public is expected to generate 2.38 times more return on investment than Krungthai Card. However, Eureka Design is 2.38 times more volatile than Krungthai Card PCL. It trades about 0.21 of its potential returns per unit of risk. Krungthai Card PCL is currently generating about 0.08 per unit of risk. If you would invest  51.00  in Eureka Design Public on September 12, 2024 and sell it today you would earn a total of  21.00  from holding Eureka Design Public or generate 41.18% return on investment over 90 days.

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

Eureka Design Public  vs.  Krungthai Card PCL

Eureka Design Public

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Design Public are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Eureka Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Krungthai Card PCL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Krungthai Card PCL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Krungthai Card 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 Eureka Design and Krungthai Card

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

The idea behind Eureka Design Public and Krungthai Card 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..