Correlation Between TMBThanachart Bank and TISCO Financial

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

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

Diversification Opportunities for TMBThanachart Bank and TISCO Financial

0.48

Correlation Coefficient

TMBThanachart Bank  TISCO Financial

Very weak diversification

The 3 months correlation between TMBThanachart and TISCO is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding TMBThanachart Bank Public and TISCO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TISCO Financial Group and TMBThanachart Bank 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 TMBThanachart Bank Public are associated (or correlated) with TISCO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TISCO Financial Group has no effect on the direction of TMBThanachart Bank i.e., TMBThanachart Bank and TISCO Financial go up and down completely randomly.

Pair Corralation between TMBThanachart Bank and TISCO Financial

Assuming the 90 days trading horizon TMBThanachart Bank Public is expected to under-perform the TISCO Financial. In addition to that, TMBThanachart Bank is 2.47 times more volatile than TISCO Financial Group. It trades about -0.03 of its total potential returns per unit of risk. TISCO Financial Group is currently generating about 0.04 per unit of volatility. If you would invest  9,650  in TISCO Financial Group on September 15, 2024 and sell it today you would earn a total of  100.00  from holding TISCO Financial Group or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

TMBThanachart Bank Public  vs.  TISCO Financial Group

TMBThanachart Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

TISCO Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TISCO Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TISCO Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TMBThanachart Bank and TISCO Financial

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

The idea behind TMBThanachart Bank Public and TISCO Financial Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.