Correlation Between CIMB Thai and Rabbit Holdings

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

By analyzing existing cross correlation between CIMB Thai Bank and Rabbit Holdings PCL, you can compare the effects of market volatilities on CIMB Thai and Rabbit Holdings 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 CIMB Thai with a short position of Rabbit Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMB Thai and Rabbit Holdings.

Diversification Opportunities for CIMB Thai and Rabbit Holdings

0.81

Correlation Coefficient

CIMB Thai  Rabbit Holdings

Very poor diversification

The 3 months correlation between CIMB and Rabbit is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CIMB Thai Bank and Rabbit Holdings PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rabbit Holdings PCL and CIMB Thai 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 CIMB Thai Bank are associated (or correlated) with Rabbit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rabbit Holdings PCL has no effect on the direction of CIMB Thai i.e., CIMB Thai and Rabbit Holdings go up and down completely randomly.

Pair Corralation between CIMB Thai and Rabbit Holdings

Assuming the 90 days trading horizon CIMB Thai Bank is expected to under-perform the Rabbit Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CIMB Thai Bank is 1.93 times less risky than Rabbit Holdings. The stock trades about -0.6 of its potential returns per unit of risk. The Rabbit Holdings PCL is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Rabbit Holdings PCL on September 25, 2024 and sell it today you would lose (8.00) from holding Rabbit Holdings PCL or give up 15.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

CIMB Thai Bank  vs.  Rabbit Holdings PCL

CIMB Thai Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMB Thai Bank 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Rabbit Holdings PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rabbit Holdings PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CIMB Thai and Rabbit Holdings

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

The idea behind CIMB Thai Bank and Rabbit Holdings PCL 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.