Correlation Between Thai Mitsuwa and Sea Oil

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

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

Diversification Opportunities for Thai Mitsuwa and Sea Oil

0.27

Correlation Coefficient

Thai Mitsuwa  Sea Oil

Modest diversification

The 3 months correlation between Thai and Sea is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thai Mitsuwa Public and Sea Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Oil Public and Thai Mitsuwa 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 Thai Mitsuwa Public are associated (or correlated) with Sea Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Oil Public has no effect on the direction of Thai Mitsuwa i.e., Thai Mitsuwa and Sea Oil go up and down completely randomly.

Pair Corralation between Thai Mitsuwa and Sea Oil

Assuming the 90 days trading horizon Thai Mitsuwa Public is expected to generate 1.05 times more return on investment than Sea Oil. However, Thai Mitsuwa is 1.05 times more volatile than Sea Oil Public. It trades about 0.0 of its potential returns per unit of risk. Sea Oil Public is currently generating about -0.04 per unit of risk. If you would invest  6,375  in Thai Mitsuwa Public on September 5, 2024 and sell it today you would lose (25.00) from holding Thai Mitsuwa Public or give up 0.39% of portfolio value over 90 days.

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

Thai Mitsuwa Public  vs.  Sea Oil Public

Thai Mitsuwa Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Mitsuwa Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Thai Mitsuwa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sea Oil Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 6 (%) 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.

Pair Trading with Thai Mitsuwa and Sea Oil

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

The idea behind Thai Mitsuwa Public and Sea Oil 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.