Correlation Between Kasikornbank Public and Bank of Ayudhya

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

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

Diversification Opportunities for Kasikornbank Public and Bank of Ayudhya

0.87

Correlation Coefficient

Kasikornbank Public  Bank of Ayudhya

Very poor diversification

The 3 months correlation between Kasikornbank and Bank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public and Bank of Ayudhya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ayudhya 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 Bank of Ayudhya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ayudhya has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and Bank of Ayudhya go up and down completely randomly.

Pair Corralation between Kasikornbank Public and Bank of Ayudhya

Assuming the 90 days trading horizon Kasikornbank Public is expected to generate 0.72 times more return on investment than Bank of Ayudhya. However, Kasikornbank Public is 1.4 times less risky than Bank of Ayudhya. It trades about 0.08 of its potential returns per unit of risk. Bank of Ayudhya is currently generating about 0.03 per unit of risk. If you would invest  14,261  in Kasikornbank Public on September 3, 2024 and sell it today you would earn a total of  789.00  from holding Kasikornbank Public or generate 5.53% return on investment over 90 days.

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

Kasikornbank Public  vs.  Bank of Ayudhya

Kasikornbank Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kasikornbank Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Kasikornbank Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bank of Ayudhya

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Kasikornbank Public and Bank of Ayudhya

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

The idea behind Kasikornbank Public and Bank of Ayudhya 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.