Correlation Between Krung Thai and WHA Premium

Can any of the company-specific risk be diversified away by investing in both Krung Thai and WHA Premium 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 WHA Premium 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 WHA Premium Growth, you can compare the effects of market volatilities on Krung Thai and WHA Premium 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 WHA Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and WHA Premium.

Diversification Opportunities for Krung Thai and WHA Premium

-0.74

Correlation Coefficient

Krung Thai  WHA Premium

Pay attention - limited upside

The 3 months correlation between Krung and WHA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and WHA Premium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Premium Growth 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 WHA Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Premium Growth has no effect on the direction of Krung Thai i.e., Krung Thai and WHA Premium go up and down completely randomly.

Pair Corralation between Krung Thai and WHA Premium

Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 1.06 times more return on investment than WHA Premium. However, Krung Thai is 1.06 times more volatile than WHA Premium Growth. It trades about 0.05 of its potential returns per unit of risk. WHA Premium Growth is currently generating about 0.0 per unit of risk. If you would invest  1,309  in Krung Thai Bank on February 3, 2024 and sell it today you would earn a total of  361.00  from holding Krung Thai Bank or generate 27.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Krung Thai Bank  vs.  WHA Premium Growth

Krung Thai Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krung Thai Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Krung Thai may actually be approaching a critical reversion point that can send shares even higher in June 2024.

WHA Premium Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHA Premium Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Krung Thai and WHA Premium

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

The idea behind Krung Thai Bank and WHA Premium Growth 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.