Correlation Between CP ALL and PTT Exploration

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

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

Diversification Opportunities for CP ALL and PTT Exploration

0.07

Correlation Coefficient

CP ALL  PTT Exploration

Significant diversification

The 3 months correlation between CPALL and PTT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and CP ALL 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 CP ALL Public are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of CP ALL i.e., CP ALL and PTT Exploration go up and down completely randomly.

Pair Corralation between CP ALL and PTT Exploration

Assuming the 90 days trading horizon CP ALL Public is expected to generate 1.0 times more return on investment than PTT Exploration. However, CP ALL is 1.0 times more volatile than PTT Exploration and. It trades about 0.07 of its potential returns per unit of risk. PTT Exploration and is currently generating about -0.01 per unit of risk. If you would invest  5,184  in CP ALL Public on September 4, 2024 and sell it today you would earn a total of  1,191  from holding CP ALL Public or generate 22.97% return on investment over 90 days.

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

CP ALL Public  vs.  PTT Exploration and

CP ALL Public

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CP ALL Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, CP ALL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PTT Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Exploration and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 CP ALL and PTT Exploration

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

The idea behind CP ALL Public and PTT Exploration and 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.