Correlation Between Moong Pattana and Sea Oil

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

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

Diversification Opportunities for Moong Pattana and Sea Oil

0.1

Correlation Coefficient

Moong Pattana  Sea Oil

Average diversification

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

Pair Corralation between Moong Pattana and Sea Oil

Assuming the 90 days trading horizon Moong Pattana International is expected to under-perform the Sea Oil. But the stock apears to be less risky and, when comparing its historical volatility, Moong Pattana International is 1.13 times less risky than Sea Oil. The stock trades about -0.15 of its potential returns per unit of risk. The Sea Oil Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Sea Oil Public on December 2, 2024 and sell it today you would earn a total of  10.00  from holding Sea Oil Public or generate 3.94% return on investment over 90 days.

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

Moong Pattana International  vs.  Sea Oil Public

Moong Pattana Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moong Pattana International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sea Oil Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sea Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moong Pattana and Sea Oil

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

The idea behind Moong Pattana International and Sea 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.