Correlation Between SCB X and Bangkok Land

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

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

Diversification Opportunities for SCB X and Bangkok Land

0.17

Correlation Coefficient

SCB X  Bangkok Land

Average diversification

The 3 months correlation between SCB and Bangkok is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Bangkok Land Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Land Public and SCB X 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 SCB X Public are associated (or correlated) with Bangkok Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Land Public has no effect on the direction of SCB X i.e., SCB X and Bangkok Land go up and down completely randomly.

Pair Corralation between SCB X and Bangkok Land

Assuming the 90 days trading horizon SCB X is expected to generate 115.96 times less return on investment than Bangkok Land. But when comparing it to its historical volatility, SCB X Public is 112.17 times less risky than Bangkok Land. It trades about 0.12 of its potential returns per unit of risk. Bangkok Land Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Bangkok Land Public on September 3, 2024 and sell it today you would earn a total of  60.00  from holding Bangkok Land Public or generate 9.223372036854776E16% return on investment over 90 days.

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

SCB X Public  vs.  Bangkok Land Public

SCB X Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bangkok Land Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Land Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Bangkok Land sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCB X and Bangkok Land

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

The idea behind SCB X Public and Bangkok Land 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.