Correlation Between BOSTON BEER and PTT Global

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

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

Diversification Opportunities for BOSTON BEER and PTT Global

-0.79

Correlation Coefficient

BOSTON BEER  PTT Global

Pay attention - limited upside

The 3 months correlation between BOSTON and PTT is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and PTT Global Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Global Chemical and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with PTT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Global Chemical has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and PTT Global go up and down completely randomly.

Pair Corralation between BOSTON BEER and PTT Global

Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.6 times more return on investment than PTT Global. However, BOSTON BEER A is 1.67 times less risky than PTT Global. It trades about 0.19 of its potential returns per unit of risk. PTT Global Chemical is currently generating about -0.09 per unit of risk. If you would invest  24,100  in BOSTON BEER A on September 23, 2024 and sell it today you would earn a total of  5,260  from holding BOSTON BEER A or generate 21.83% return on investment over 90 days.

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

BOSTON BEER A   vs.  PTT Global Chemical

BOSTON BEER A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

PTT Global Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Global Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BOSTON BEER and PTT Global

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

The idea behind BOSTON BEER A and PTT Global Chemical 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..