Correlation Between Thai Union and PTG Energy

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

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

Diversification Opportunities for Thai Union and PTG Energy

0.27

Correlation Coefficient

Thai Union  PTG Energy

Modest diversification

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

Pair Corralation between Thai Union and PTG Energy

Assuming the 90 days horizon Thai Union Group is expected to generate 55.68 times more return on investment than PTG Energy. However, Thai Union is 55.68 times more volatile than PTG Energy PCL. It trades about 0.1 of its potential returns per unit of risk. PTG Energy PCL is currently generating about 0.09 per unit of risk. If you would invest  1,372  in Thai Union Group on September 5, 2024 and sell it today you would lose (12.00) from holding Thai Union Group or give up 0.87% of portfolio value over 90 days.

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

Thai Union Group  vs.  PTG Energy PCL

Thai Union Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Union Group 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.

PTG Energy PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTG Energy PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, PTG Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thai Union and PTG Energy

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

The idea behind Thai Union Group and PTG Energy PCL 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.