Correlation Between Star Petroleum and PTT Exploration

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

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

Diversification Opportunities for Star Petroleum and PTT Exploration

0.54

Correlation Coefficient

Star Petroleum  PTT Exploration

Very weak diversification

The 3 months correlation between Star and PTT is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Star Petroleum Refining and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and Star Petroleum 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 Star Petroleum Refining are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of Star Petroleum i.e., Star Petroleum and PTT Exploration go up and down completely randomly.

Pair Corralation between Star Petroleum and PTT Exploration

Assuming the 90 days trading horizon Star Petroleum Refining is expected to generate 1.39 times more return on investment than PTT Exploration. However, Star Petroleum is 1.39 times more volatile than PTT Exploration and. It trades about 0.06 of its potential returns per unit of risk. PTT Exploration and is currently generating about -0.11 per unit of risk. If you would invest  650.00  in Star Petroleum Refining on September 13, 2024 and sell it today you would earn a total of  45.00  from holding Star Petroleum Refining or generate 6.92% return on investment over 90 days.

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

Star Petroleum Refining  vs.  PTT Exploration and

Star Petroleum Refining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Petroleum Refining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Star Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PTT Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Exploration and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Star Petroleum and PTT Exploration

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

The idea behind Star Petroleum Refining and PTT Exploration and 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..