Correlation Between Bangkok Bank and Simat Technologies

Can any of the company-specific risk be diversified away by investing in both Bangkok Bank and Simat Technologies 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 Simat Technologies 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 Simat Technologies Public, you can compare the effects of market volatilities on Bangkok Bank and Simat Technologies 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 Simat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Bank and Simat Technologies.

Diversification Opportunities for Bangkok Bank and Simat Technologies

-0.42

Correlation Coefficient

Bangkok Bank  Simat Technologies

Very good diversification

The 3 months correlation between Bangkok and Simat is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and Simat Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simat Technologies Public 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 Simat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simat Technologies Public has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and Simat Technologies go up and down completely randomly.

Pair Corralation between Bangkok Bank and Simat Technologies

Assuming the 90 days trading horizon Bangkok Bank Public is expected to generate 0.24 times more return on investment than Simat Technologies. However, Bangkok Bank Public is 4.14 times less risky than Simat Technologies. It trades about -0.03 of its potential returns per unit of risk. Simat Technologies Public is currently generating about -0.01 per unit of risk. If you would invest  15,500  in Bangkok Bank Public on September 12, 2024 and sell it today you would lose (400.00) from holding Bangkok Bank Public or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Bangkok Bank Public  vs.  Simat Technologies Public

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.

Simat Technologies Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simat Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Simat Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Bank and Simat Technologies

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

The idea behind Bangkok Bank Public and Simat Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.