Correlation Between Bank of Ayudhya and VL Enterprise

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

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

Diversification Opportunities for Bank of Ayudhya and VL Enterprise

-0.34

Correlation Coefficient

Bank of Ayudhya  VL Enterprise

Very good diversification

The 3 months correlation between Bank and VL Enterprise is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and VL Enterprise Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VL Enterprise Public and Bank of Ayudhya 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 Bank of Ayudhya are associated (or correlated) with VL Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VL Enterprise Public has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and VL Enterprise go up and down completely randomly.

Pair Corralation between Bank of Ayudhya and VL Enterprise

Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 3.21 times less return on investment than VL Enterprise. But when comparing it to its historical volatility, Bank of Ayudhya is 2.82 times less risky than VL Enterprise. It trades about 0.03 of its potential returns per unit of risk. VL Enterprise Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  114.00  in VL Enterprise Public on September 15, 2024 and sell it today you would earn a total of  9.00  from holding VL Enterprise Public or generate 7.89% return on investment over 90 days.

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

Bank of Ayudhya  vs.  VL Enterprise Public

Bank of Ayudhya

Risk-Adjusted Performance

0 of 100

Very Weak

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

VL Enterprise Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VL Enterprise Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, VL Enterprise disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ayudhya and VL Enterprise

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

The idea behind Bank of Ayudhya and VL Enterprise 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.