Correlation Between Thailand Prime and KPN Property

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

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

Diversification Opportunities for Thailand Prime and KPN Property

-0.38

Correlation Coefficient

Thailand Prime  KPN Property

Very good diversification

The 3 months correlation between Thailand and KPN is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Thailand Prime Property and KPN Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPN Property and Thailand Prime 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 Thailand Prime Property are associated (or correlated) with KPN Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPN Property has no effect on the direction of Thailand Prime i.e., Thailand Prime and KPN Property go up and down completely randomly.

Pair Corralation between Thailand Prime and KPN Property

Assuming the 90 days trading horizon Thailand Prime Property is expected to generate 0.14 times more return on investment than KPN Property. However, Thailand Prime Property is 7.07 times less risky than KPN Property. It trades about 0.04 of its potential returns per unit of risk. KPN Property is currently generating about -0.12 per unit of risk. If you would invest  726.00  in Thailand Prime Property on September 28, 2024 and sell it today you would earn a total of  24.00  from holding Thailand Prime Property or generate 3.31% return on investment over 90 days.

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

Thailand Prime Property  vs.  KPN Property

Thailand Prime Property

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thailand Prime Property are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Thailand Prime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KPN Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KPN Property 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.

Pair Trading with Thailand Prime and KPN Property

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

The idea behind Thailand Prime Property and KPN Property 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.