Correlation Between Thai Oil and PTT Oil

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

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

Diversification Opportunities for Thai Oil and PTT Oil

0.15

Correlation Coefficient

Thai Oil  PTT Oil

Average diversification

The 3 months correlation between Thai and PTT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and PTT Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Oil and Thai 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 Thai Oil Public are associated (or correlated) with PTT Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Oil has no effect on the direction of Thai Oil i.e., Thai Oil and PTT Oil go up and down completely randomly.

Pair Corralation between Thai Oil and PTT Oil

Assuming the 90 days trading horizon Thai Oil Public is expected to generate 72.39 times more return on investment than PTT Oil. However, Thai Oil is 72.39 times more volatile than PTT Oil and. It trades about 0.11 of its potential returns per unit of risk. PTT Oil and is currently generating about -0.1 per unit of risk. If you would invest  4,625  in Thai Oil Public on September 5, 2024 and sell it today you would lose (750.00) from holding Thai Oil Public or give up 16.22% of portfolio value over 90 days.

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

Thai Oil Public  vs.  PTT Oil and

Thai Oil Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thai Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

PTT Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Oil 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 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 Thai Oil and PTT Oil

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

The idea behind Thai Oil Public and PTT Oil 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.