Correlation Between Thai Oil and Banpu Public

Can any of the company-specific risk be diversified away by investing in both Thai Oil and Banpu Public 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 Banpu Public 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 Banpu Public, you can compare the effects of market volatilities on Thai Oil and Banpu Public 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 Banpu Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Banpu Public.

Diversification Opportunities for Thai Oil and Banpu Public

0.42

Correlation Coefficient

Thai Oil  Banpu Public

Very weak diversification

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

Pair Corralation between Thai Oil and Banpu Public

Assuming the 90 days trading horizon Thai Oil Public is expected to under-perform the Banpu Public. But the stock apears to be less risky and, when comparing its historical volatility, Thai Oil Public is 1.46 times less risky than Banpu Public. The stock trades about -0.24 of its potential returns per unit of risk. The Banpu Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  534.00  in Banpu Public on September 4, 2024 and sell it today you would earn a total of  46.00  from holding Banpu Public or generate 8.61% return on investment over 90 days.

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

Thai Oil Public  vs.  Banpu Public

Thai Oil Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Oil Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Banpu Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banpu Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Banpu Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thai Oil and Banpu Public

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

The idea behind Thai Oil Public and Banpu 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.