Correlation Between PTT Exploration and AJ Plast

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

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

Diversification Opportunities for PTT Exploration and AJ Plast

0.66

Correlation Coefficient

PTT Exploration  AJ Plast

Poor diversification

The 3 months correlation between PTT and AJ Plast is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PTT Exploration and and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public and PTT Exploration 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 PTT Exploration and are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of PTT Exploration i.e., PTT Exploration and AJ Plast go up and down completely randomly.

Pair Corralation between PTT Exploration and AJ Plast

Assuming the 90 days trading horizon PTT Exploration and is expected to under-perform the AJ Plast. In addition to that, PTT Exploration is 3.53 times more volatile than AJ Plast Public. It trades about -0.21 of its total potential returns per unit of risk. AJ Plast Public is currently generating about -0.25 per unit of volatility. If you would invest  510.00  in AJ Plast Public on September 2, 2024 and sell it today you would lose (30.00) from holding AJ Plast Public or give up 5.88% of portfolio value over 90 days.

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

PTT Exploration and  vs.  AJ Plast Public

PTT Exploration

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, PTT Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

AJ Plast Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Plast Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, AJ Plast disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PTT Exploration and AJ Plast

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

The idea behind PTT Exploration and and AJ Plast 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.