Correlation Between CP ALL and Thai Oil

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

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

Diversification Opportunities for CP ALL and Thai Oil

0.23

Correlation Coefficient

CP ALL  Thai Oil

Modest diversification

The 3 months correlation between CPALL and Thai is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and CP ALL 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 CP ALL Public are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of CP ALL i.e., CP ALL and Thai Oil go up and down completely randomly.

Pair Corralation between CP ALL and Thai Oil

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Thai Oil. But the stock apears to be less risky and, when comparing its historical volatility, CP ALL Public is 1.24 times less risky than Thai Oil. The stock trades about -0.43 of its potential returns per unit of risk. The Thai Oil Public is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest  4,050  in Thai Oil Public on September 24, 2024 and sell it today you would lose (550.00) from holding Thai Oil Public or give up 13.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

CP ALL Public  vs.  Thai Oil Public

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Oil Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thai Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CP ALL and Thai Oil

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

The idea behind CP ALL Public and Thai Oil 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.