Correlation Between PTT Global and NVR

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

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

Diversification Opportunities for PTT Global and NVR

-0.26

Correlation Coefficient

PTT Global  NVR

Very good diversification

The 3 months correlation between PTT and NVR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PTT Global Chemical and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc and PTT Global 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 PTT Global Chemical are associated (or correlated) with NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of PTT Global i.e., PTT Global and NVR go up and down completely randomly.

Pair Corralation between PTT Global and NVR

Assuming the 90 days trading horizon PTT Global Chemical is expected to generate 1.98 times more return on investment than NVR. However, PTT Global is 1.98 times more volatile than NVR Inc. It trades about 0.03 of its potential returns per unit of risk. NVR Inc is currently generating about -0.16 per unit of risk. If you would invest  66.00  in PTT Global Chemical on October 7, 2024 and sell it today you would earn a total of  1.00  from holding PTT Global Chemical or generate 1.52% return on investment over 90 days.

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

PTT Global Chemical  vs.  NVR Inc

PTT Global Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Global Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PTT Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NVR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PTT Global and NVR

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

The idea behind PTT Global Chemical and NVR Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.