Correlation Between Land and Krung Thai

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

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

Diversification Opportunities for Land and Krung Thai

0.34

Correlation Coefficient

Land  Krung Thai

Weak diversification

The 3 months correlation between Land and Krung is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank and Land 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 Land and Houses are associated (or correlated) with Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of Land i.e., Land and Krung Thai go up and down completely randomly.

Pair Corralation between Land and Krung Thai

Assuming the 90 days horizon Land and Houses is expected to under-perform the Krung Thai. In addition to that, Land is 1.65 times more volatile than Krung Thai Bank. It trades about 0.0 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about 0.11 per unit of volatility. If you would invest  1,860  in Krung Thai Bank on September 3, 2024 and sell it today you would earn a total of  140.00  from holding Krung Thai Bank or generate 7.53% return on investment over 90 days.

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

Land and Houses  vs.  Krung Thai Bank

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Krung Thai Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Krung Thai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Land and Krung Thai

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

The idea behind Land and Houses and Krung Thai Bank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.