Correlation Between Krung Thai and Asian Sea

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

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

Diversification Opportunities for Krung Thai and Asian Sea

0.63

Correlation Coefficient

Krung Thai  Asian Sea

Poor diversification

The 3 months correlation between Krung and Asian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Asian Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Sea and Krung Thai 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 Krung Thai Bank are associated (or correlated) with Asian Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Sea has no effect on the direction of Krung Thai i.e., Krung Thai and Asian Sea go up and down completely randomly.

Pair Corralation between Krung Thai and Asian Sea

Assuming the 90 days trading horizon Krung Thai is expected to generate 70.35 times less return on investment than Asian Sea. But when comparing it to its historical volatility, Krung Thai Bank is 126.09 times less risky than Asian Sea. It trades about 0.23 of its potential returns per unit of risk. Asian Sea is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  652.00  in Asian Sea on March 15, 2024 and sell it today you would earn a total of  398.00  from holding Asian Sea or generate 61.04% return on investment over 90 days.

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

Krung Thai Bank  vs.  Asian Sea

Krung Thai Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Krung Thai disclosed solid returns over the last few months and may actually be approaching a breakup point.

Asian Sea

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Krung Thai and Asian Sea

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

The idea behind Krung Thai Bank and Asian Sea 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.