Correlation Between Digital Telecommunicatio and Thai Oil

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

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

Diversification Opportunities for Digital Telecommunicatio and Thai Oil

0.05

Correlation Coefficient

Digital Telecommunicatio  Thai Oil

Significant diversification

The 3 months correlation between Digital and Thai is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Digital Telecommunications Inf and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Digital Telecommunicatio 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 Digital Telecommunications Infrastructure are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Digital Telecommunicatio i.e., Digital Telecommunicatio and Thai Oil go up and down completely randomly.

Pair Corralation between Digital Telecommunicatio and Thai Oil

Assuming the 90 days trading horizon Digital Telecommunications Infrastructure is expected to generate 0.48 times more return on investment than Thai Oil. However, Digital Telecommunications Infrastructure is 2.08 times less risky than Thai Oil. It trades about 0.01 of its potential returns per unit of risk. Thai Oil Public is currently generating about -0.23 per unit of risk. If you would invest  883.00  in Digital Telecommunications Infrastructure on September 13, 2024 and sell it today you would earn a total of  2.00  from holding Digital Telecommunications Infrastructure or generate 0.23% return on investment over 90 days.

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

Digital Telecommunications Inf  vs.  Thai Oil Public

Digital Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thai Oil Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Oil Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Digital Telecommunicatio and Thai Oil

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

The idea behind Digital Telecommunications Infrastructure and Thai Oil 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.