Correlation Between Philip Morris and Siamgas

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

By analyzing existing cross correlation between Philip Morris International and Siamgas And Petrochemicals, you can compare the effects of market volatilities on Philip Morris and Siamgas 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 Philip Morris with a short position of Siamgas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Siamgas.

Diversification Opportunities for Philip Morris and Siamgas

0.02

Correlation Coefficient

Philip Morris  Siamgas

Significant diversification

The 3 months correlation between Philip and Siamgas is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Siamgas And Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siamgas And Petroche and Philip Morris 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 Philip Morris International are associated (or correlated) with Siamgas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siamgas And Petroche has no effect on the direction of Philip Morris i.e., Philip Morris and Siamgas go up and down completely randomly.

Pair Corralation between Philip Morris and Siamgas

Assuming the 90 days trading horizon Philip Morris International is expected to generate 0.25 times more return on investment than Siamgas. However, Philip Morris International is 4.07 times less risky than Siamgas. It trades about 0.17 of its potential returns per unit of risk. Siamgas And Petrochemicals is currently generating about 0.04 per unit of risk. If you would invest  11,671  in Philip Morris International on December 23, 2024 and sell it today you would earn a total of  2,365  from holding Philip Morris International or generate 20.26% return on investment over 90 days.

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

Philip Morris International  vs.  Siamgas And Petrochemicals

Philip Morris Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Philip Morris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Siamgas And Petroche

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siamgas And Petrochemicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Siamgas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philip Morris and Siamgas

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

The idea behind Philip Morris International and Siamgas And Petrochemicals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.