Correlation Between Repsol SA and PTT PCL

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

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

Diversification Opportunities for Repsol SA and PTT PCL

0.42

Correlation Coefficient

Repsol SA  PTT PCL

Very weak diversification

The 3 months correlation between Repsol and PTT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Repsol SA and PTT PCL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT PCL ADR and Repsol SA 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 Repsol SA are associated (or correlated) with PTT PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT PCL ADR has no effect on the direction of Repsol SA i.e., Repsol SA and PTT PCL go up and down completely randomly.

Pair Corralation between Repsol SA and PTT PCL

If you would invest  468.00  in PTT PCL ADR on September 14, 2024 and sell it today you would earn a total of  41.00  from holding PTT PCL ADR or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Repsol SA  vs.  PTT PCL ADR

Repsol SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repsol SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Repsol SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PTT PCL ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTT PCL ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, PTT PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Repsol SA and PTT PCL

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

The idea behind Repsol SA and PTT PCL ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.