Correlation Between PTT Exploration and EMC Public

Can any of the company-specific risk be diversified away by investing in both PTT Exploration and EMC 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 PTT Exploration and EMC Public 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 EMC Public, you can compare the effects of market volatilities on PTT Exploration and EMC 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 PTT Exploration with a short position of EMC Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Exploration and EMC Public.

Diversification Opportunities for PTT Exploration and EMC Public

-0.33

Correlation Coefficient

PTT Exploration  EMC Public

Very good diversification

The 3 months correlation between PTT and EMC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PTT Exploration and and EMC Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMC 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 EMC Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMC Public has no effect on the direction of PTT Exploration i.e., PTT Exploration and EMC Public go up and down completely randomly.

Pair Corralation between PTT Exploration and EMC Public

Assuming the 90 days trading horizon PTT Exploration and is expected to generate 16.58 times more return on investment than EMC Public. However, PTT Exploration is 16.58 times more volatile than EMC Public. It trades about 0.11 of its potential returns per unit of risk. EMC Public is currently generating about -0.01 per unit of risk. If you would invest  15,471  in PTT Exploration and on September 18, 2024 and sell it today you would lose (2,971) from holding PTT Exploration and or give up 19.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

PTT Exploration and  vs.  EMC Public

PTT Exploration

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 9 (%) 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.

EMC Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMC Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with PTT Exploration and EMC Public

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

The idea behind PTT Exploration and and EMC 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 Transaction History module to view history of all your transactions and understand their impact on performance.