Correlation Between Bangkok Sheet and Muang Thai

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

By analyzing existing cross correlation between Bangkok Sheet Metal and Muang Thai Insurance, you can compare the effects of market volatilities on Bangkok Sheet and Muang Thai 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 Sheet with a short position of Muang Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Sheet and Muang Thai.

Diversification Opportunities for Bangkok Sheet and Muang Thai

-0.13

Correlation Coefficient

Bangkok Sheet  Muang Thai

Good diversification

The 3 months correlation between Bangkok and Muang is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Sheet Metal and Muang Thai Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muang Thai Insurance and Bangkok Sheet 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 Sheet Metal are associated (or correlated) with Muang Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muang Thai Insurance has no effect on the direction of Bangkok Sheet i.e., Bangkok Sheet and Muang Thai go up and down completely randomly.

Pair Corralation between Bangkok Sheet and Muang Thai

Assuming the 90 days horizon Bangkok Sheet Metal is expected to generate 1.0 times more return on investment than Muang Thai. However, Bangkok Sheet is 1.0 times more volatile than Muang Thai Insurance. It trades about 0.06 of its potential returns per unit of risk. Muang Thai Insurance is currently generating about 0.06 per unit of risk. If you would invest  287.00  in Bangkok Sheet Metal on September 14, 2024 and sell it today you would earn a total of  27.00  from holding Bangkok Sheet Metal or generate 9.41% return on investment over 90 days.

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

Bangkok Sheet Metal  vs.  Muang Thai Insurance

Bangkok Sheet Metal

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Sheet Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Bangkok Sheet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Muang Thai Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muang Thai Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Muang Thai is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bangkok Sheet and Muang Thai

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

The idea behind Bangkok Sheet Metal and Muang Thai Insurance 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.