Correlation Between Thai Eastern and MBK Public

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

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

Diversification Opportunities for Thai Eastern and MBK Public

-0.33

Correlation Coefficient

Thai Eastern  MBK Public

Very good diversification

The 3 months correlation between Thai and MBK is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thai Eastern Group and MBK Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBK Public and Thai Eastern 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 Thai Eastern Group are associated (or correlated) with MBK Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBK Public has no effect on the direction of Thai Eastern i.e., Thai Eastern and MBK Public go up and down completely randomly.

Pair Corralation between Thai Eastern and MBK Public

Assuming the 90 days trading horizon Thai Eastern is expected to generate 4.0 times less return on investment than MBK Public. In addition to that, Thai Eastern is 1.17 times more volatile than MBK Public. It trades about 0.05 of its total potential returns per unit of risk. MBK Public is currently generating about 0.24 per unit of volatility. If you would invest  1,615  in MBK Public on February 4, 2024 and sell it today you would earn a total of  115.00  from holding MBK Public or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Thai Eastern Group  vs.  MBK Public

Thai Eastern Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Eastern Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Thai Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MBK Public

Risk-Adjusted Performance

9 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MBK Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, MBK Public may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Thai Eastern and MBK Public

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

The idea behind Thai Eastern Group and MBK Public 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.