Correlation Between Delta Electronics and PTT Exploration

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

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

Diversification Opportunities for Delta Electronics and PTT Exploration

-0.1

Correlation Coefficient

Delta Electronics  PTT Exploration

Good diversification

The 3 months correlation between Delta and PTT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and Delta Electronics 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 Delta Electronics Public are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of Delta Electronics i.e., Delta Electronics and PTT Exploration go up and down completely randomly.

Pair Corralation between Delta Electronics and PTT Exploration

Assuming the 90 days trading horizon Delta Electronics is expected to generate 36.63 times less return on investment than PTT Exploration. But when comparing it to its historical volatility, Delta Electronics Public is 27.24 times less risky than PTT Exploration. It trades about 0.13 of its potential returns per unit of risk. PTT Exploration and is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.00  in PTT Exploration and on September 3, 2024 and sell it today you would earn a total of  12,750  from holding PTT Exploration and or generate 9.223372036854776E16% return on investment over 90 days.

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

Delta Electronics Public  vs.  PTT Exploration and

Delta Electronics Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

PTT Exploration

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, PTT Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Electronics and PTT Exploration

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

The idea behind Delta Electronics Public and PTT Exploration and 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.