Correlation Between Bangkok Life and Asian Sea

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

By analyzing existing cross correlation between Bangkok Life Assurance and Asian Sea, you can compare the effects of market volatilities on Bangkok Life and Asian Sea 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 Life with a short position of Asian Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Life and Asian Sea.

Diversification Opportunities for Bangkok Life and Asian Sea

0.51

Correlation Coefficient

Bangkok Life  Asian Sea

Very weak diversification

The 3 months correlation between Bangkok and Asian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Life Assurance and Asian Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Sea and Bangkok Life 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 Life Assurance are associated (or correlated) with Asian Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Sea has no effect on the direction of Bangkok Life i.e., Bangkok Life and Asian Sea go up and down completely randomly.

Pair Corralation between Bangkok Life and Asian Sea

Assuming the 90 days trading horizon Bangkok Life Assurance is expected to generate 0.9 times more return on investment than Asian Sea. However, Bangkok Life Assurance is 1.11 times less risky than Asian Sea. It trades about -0.02 of its potential returns per unit of risk. Asian Sea is currently generating about -0.02 per unit of risk. If you would invest  2,702  in Bangkok Life Assurance on September 14, 2024 and sell it today you would lose (642.00) from holding Bangkok Life Assurance or give up 23.76% of portfolio value over 90 days.

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

Bangkok Life Assurance  vs.  Asian Sea

Bangkok Life Assurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Life Assurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bangkok Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asian Sea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asian Sea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asian Sea 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 Life and Asian Sea

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

The idea behind Bangkok Life Assurance and Asian Sea 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.