Correlation Between Bangchak Public and Ananda Development

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

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

Diversification Opportunities for Bangchak Public and Ananda Development

0.9

Correlation Coefficient

Bangchak Public  Ananda Development

Almost no diversification

The 3 months correlation between Bangchak and Ananda is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bangchak Public and Ananda Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ananda Development Public and Bangchak Public 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 Bangchak Public are associated (or correlated) with Ananda Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ananda Development Public has no effect on the direction of Bangchak Public i.e., Bangchak Public and Ananda Development go up and down completely randomly.

Pair Corralation between Bangchak Public and Ananda Development

Assuming the 90 days trading horizon Bangchak Public is expected to generate 35.12 times less return on investment than Ananda Development. But when comparing it to its historical volatility, Bangchak Public is 21.07 times less risky than Ananda Development. It trades about 0.02 of its potential returns per unit of risk. Ananda Development Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Ananda Development Public on September 25, 2024 and sell it today you would lose (96.00) from holding Ananda Development Public or give up 62.34% of portfolio value over 90 days.

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

Bangchak Public  vs.  Ananda Development Public

Bangchak Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangchak Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ananda Development Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ananda Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bangchak Public and Ananda Development

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

The idea behind Bangchak Public and Ananda Development 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.