Correlation Between DAX Index and PTT Public

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

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

Diversification Opportunities for DAX Index and PTT Public

-0.17

Correlation Coefficient

DAX Index  PTT Public

Good diversification

The 3 months correlation between DAX and PTT is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and PTT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Public and DAX Index 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 DAX Index are associated (or correlated) with PTT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Public has no effect on the direction of DAX Index i.e., DAX Index and PTT Public go up and down completely randomly.

Pair Corralation between DAX Index and PTT Public

Assuming the 90 days trading horizon DAX Index is expected to generate 0.48 times more return on investment than PTT Public. However, DAX Index is 2.07 times less risky than PTT Public. It trades about 0.08 of its potential returns per unit of risk. PTT Public is currently generating about -0.04 per unit of risk. If you would invest  1,932,493  in DAX Index on September 30, 2024 and sell it today you would earn a total of  65,939  from holding DAX Index or generate 3.41% return on investment over 90 days.

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

DAX Index  vs.  PTT Public

Pair Trading with DAX Index and PTT Public

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

The idea behind DAX Index and PTT 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.