Correlation Between Kasikornbank Public and Heng Leasing

Can any of the company-specific risk be diversified away by investing in both Kasikornbank Public and Heng Leasing 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 Kasikornbank Public and Heng Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kasikornbank Public and Heng Leasing Capital, you can compare the effects of market volatilities on Kasikornbank Public and Heng Leasing 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 Kasikornbank Public with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kasikornbank Public and Heng Leasing.

Diversification Opportunities for Kasikornbank Public and Heng Leasing

0.9

Correlation Coefficient

Kasikornbank Public  Heng Leasing

Almost no diversification

The 3 months correlation between Kasikornbank and Heng is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kasikornbank Public and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital and Kasikornbank Public 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 Kasikornbank Public are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of Kasikornbank Public i.e., Kasikornbank Public and Heng Leasing go up and down completely randomly.

Pair Corralation between Kasikornbank Public and Heng Leasing

Assuming the 90 days trading horizon Kasikornbank Public is expected to generate 0.48 times more return on investment than Heng Leasing. However, Kasikornbank Public is 2.1 times less risky than Heng Leasing. It trades about 0.03 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.03 per unit of risk. If you would invest  13,164  in Kasikornbank Public on July 3, 2024 and sell it today you would earn a total of  2,036  from holding Kasikornbank Public or generate 15.47% return on investment over 90 days.

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

Kasikornbank Public  vs.  Heng Leasing Capital

Kasikornbank Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kasikornbank Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Kasikornbank Public sustained solid returns over the last few months and may actually be approaching a breakup point.

Heng Leasing Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heng Leasing Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Heng Leasing disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kasikornbank Public and Heng Leasing

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

The idea behind Kasikornbank Public and Heng Leasing Capital 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.