Correlation Between Bangkok Bank and Advanced Info

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

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

Diversification Opportunities for Bangkok Bank and Advanced Info

-0.44

Correlation Coefficient

Bangkok Bank  Advanced Info

Very good diversification

The 3 months correlation between Bangkok and Advanced is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Bangkok 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 Bangkok Bank Public are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Advanced Info go up and down completely randomly.

Pair Corralation between Bangkok Bank and Advanced Info

Assuming the 90 days trading horizon Bangkok Bank Public is expected to under-perform the Advanced Info. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Bank Public is 1.57 times less risky than Advanced Info. The stock trades about -0.08 of its potential returns per unit of risk. The Advanced Info Service is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  25,600  in Advanced Info Service on September 14, 2024 and sell it today you would earn a total of  3,100  from holding Advanced Info Service or generate 12.11% return on investment over 90 days.

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

Bangkok Bank Public  vs.  Advanced Info Service

Bangkok Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Bank Public has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Advanced Info Service

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Advanced Info sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Bank and Advanced Info

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

The idea behind Bangkok Bank Public and Advanced Info Service 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.