Correlation Between Unique Mining and Krung Thai

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

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

Diversification Opportunities for Unique Mining and Krung Thai

0.65

Correlation Coefficient

Unique Mining  Krung Thai

Poor diversification

The 3 months correlation between Unique and Krung is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Unique Mining Services 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 Unique Mining 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 Unique Mining Services 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 Unique Mining i.e., Unique Mining and Krung Thai go up and down completely randomly.

Pair Corralation between Unique Mining and Krung Thai

Assuming the 90 days trading horizon Unique Mining Services is expected to under-perform the Krung Thai. In addition to that, Unique Mining is 8.8 times more volatile than Krung Thai Bank. It trades about -0.03 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about -0.04 per unit of volatility. If you would invest  2,070  in Krung Thai Bank on September 5, 2024 and sell it today you would lose (40.00) from holding Krung Thai Bank or give up 1.93% of portfolio value over 90 days.

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

Unique Mining Services  vs.  Krung Thai Bank

Unique Mining Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unique Mining Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Unique Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Krung Thai Bank

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Unique Mining and Krung Thai

The main advantage of trading using opposite Unique Mining and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unique Mining 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 Unique Mining Services 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.