Correlation Between Kasikornbank Public and Thai Oil

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

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

Diversification Opportunities for Kasikornbank Public and Thai Oil

0.05

Correlation Coefficient

Kasikornbank Public  Thai Oil

Significant diversification

The 3 months correlation between Kasikornbank and Thai is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Kasikornbank 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 Kasikornbank Public are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and Thai Oil go up and down completely randomly.

Pair Corralation between Kasikornbank Public and Thai Oil

Assuming the 90 days trading horizon Kasikornbank Public is expected to generate 0.2 times more return on investment than Thai Oil. However, Kasikornbank Public is 5.06 times less risky than Thai Oil. It trades about 0.33 of its potential returns per unit of risk. Thai Oil Public is currently generating about -0.23 per unit of risk. If you would invest  14,650  in Kasikornbank Public on September 5, 2024 and sell it today you would earn a total of  700.00  from holding Kasikornbank Public or generate 4.78% return on investment over 90 days.

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

Kasikornbank Public  vs.  Thai Oil Public

Kasikornbank Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kasikornbank Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kasikornbank Public is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Thai Oil Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thai Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kasikornbank Public and Thai Oil

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

The idea behind Kasikornbank Public and Thai Oil 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.