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 RETAIL, 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

0.77

Correlation Coefficient

Thai Oil  PTT OIL

Poor diversification

The 3 months correlation between Thai and PTT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and PTT OIL RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT OIL RETAIL 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 RETAIL 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 under-perform the PTT OIL. In addition to that, Thai Oil is 1.19 times more volatile than PTT OIL RETAIL. It trades about -0.05 of its total potential returns per unit of risk. PTT OIL RETAIL is currently generating about -0.06 per unit of volatility. If you would invest  2,264  in PTT OIL RETAIL on September 24, 2024 and sell it today you would lose (954.00) from holding PTT OIL RETAIL or give up 42.14% of portfolio value over 90 days.

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

Thai Oil Public  vs.  PTT OIL RETAIL

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.

PTT OIL RETAIL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT OIL RETAIL 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 forward-looking signals 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.

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 RETAIL 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.