Correlation Between Applied DB and PTT Public

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

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

Diversification Opportunities for Applied DB and PTT Public

0.4

Correlation Coefficient

Applied DB  PTT Public

Very weak diversification

The 3 months correlation between Applied and PTT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Applied DB Public and PTT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Public and Applied DB 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 Applied DB Public are associated (or correlated) with PTT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Public has no effect on the direction of Applied DB i.e., Applied DB and PTT Public go up and down completely randomly.

Pair Corralation between Applied DB and PTT Public

Assuming the 90 days trading horizon Applied DB Public is expected to generate 4.31 times more return on investment than PTT Public. However, Applied DB is 4.31 times more volatile than PTT Public. It trades about -0.02 of its potential returns per unit of risk. PTT Public is currently generating about -0.2 per unit of risk. If you would invest  94.00  in Applied DB Public on September 27, 2024 and sell it today you would lose (6.00) from holding Applied DB Public or give up 6.38% of portfolio value over 90 days.

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

Applied DB Public  vs.  PTT Public

Applied DB Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied DB Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Applied DB is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

PTT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers 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 Applied DB and PTT Public

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

The idea behind Applied DB Public and PTT 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.