Correlation Between Thai OPP and MCOT Public

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

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

Diversification Opportunities for Thai OPP and MCOT Public

0.66

Correlation Coefficient

Thai OPP  MCOT Public

Poor diversification

The 3 months correlation between Thai and MCOT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Thai OPP Public and MCOT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCOT Public and Thai OPP 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 OPP Public are associated (or correlated) with MCOT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCOT Public has no effect on the direction of Thai OPP i.e., Thai OPP and MCOT Public go up and down completely randomly.

Pair Corralation between Thai OPP and MCOT Public

Assuming the 90 days trading horizon Thai OPP Public is expected to under-perform the MCOT Public. But the stock apears to be less risky and, when comparing its historical volatility, Thai OPP Public is 30.08 times less risky than MCOT Public. The stock trades about -0.22 of its potential returns per unit of risk. The MCOT Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  585.00  in MCOT Public on September 15, 2024 and sell it today you would earn a total of  60.00  from holding MCOT Public or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Thai OPP Public  vs.  MCOT Public

Thai OPP Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai OPP Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Thai OPP is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MCOT Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MCOT Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, MCOT Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai OPP and MCOT Public

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

The idea behind Thai OPP Public and MCOT 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.