Correlation Between North Dallas and Bangkok Bank

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

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

Diversification Opportunities for North Dallas and Bangkok Bank

-0.57

Correlation Coefficient

North Dallas  Bangkok Bank

Excellent diversification

The 3 months correlation between North and Bangkok is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding North Dallas Bank and Bangkok Bank PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank PCL and North Dallas 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 North Dallas Bank are associated (or correlated) with Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank PCL has no effect on the direction of North Dallas i.e., North Dallas and Bangkok Bank go up and down completely randomly.

Pair Corralation between North Dallas and Bangkok Bank

Given the investment horizon of 90 days North Dallas Bank is expected to generate 0.18 times more return on investment than Bangkok Bank. However, North Dallas Bank is 5.43 times less risky than Bangkok Bank. It trades about 0.12 of its potential returns per unit of risk. Bangkok Bank PCL is currently generating about 0.02 per unit of risk. If you would invest  4,368  in North Dallas Bank on March 17, 2024 and sell it today you would earn a total of  57.00  from holding North Dallas Bank or generate 1.3% return on investment over 90 days.

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

North Dallas Bank  vs.  Bangkok Bank PCL

North Dallas Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Dallas Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Bangkok Bank PCL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Bank PCL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Bangkok Bank may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with North Dallas and Bangkok Bank

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

The idea behind North Dallas Bank and Bangkok Bank PCL 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.