Correlation Between Sea Oil and Thai Mitsuwa

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

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

Diversification Opportunities for Sea Oil and Thai Mitsuwa

0.46

Correlation Coefficient

Sea Oil  Thai Mitsuwa

Very weak diversification

The 3 months correlation between Sea and Thai is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sea Oil Public and Thai Mitsuwa Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Mitsuwa Public and Sea Oil 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 Sea Oil Public are associated (or correlated) with Thai Mitsuwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Mitsuwa Public has no effect on the direction of Sea Oil i.e., Sea Oil and Thai Mitsuwa go up and down completely randomly.

Pair Corralation between Sea Oil and Thai Mitsuwa

Assuming the 90 days trading horizon Sea Oil Public is expected to generate 1.32 times more return on investment than Thai Mitsuwa. However, Sea Oil is 1.32 times more volatile than Thai Mitsuwa Public. It trades about 0.09 of its potential returns per unit of risk. Thai Mitsuwa Public is currently generating about 0.03 per unit of risk. If you would invest  243.00  in Sea Oil Public on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Sea Oil Public or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Sea Oil Public  vs.  Thai Mitsuwa Public

Sea Oil Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Sea Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thai Mitsuwa Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Mitsuwa Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Thai Mitsuwa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sea Oil and Thai Mitsuwa

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

The idea behind Sea Oil Public and Thai Mitsuwa 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.