Correlation Between PTT Oil and Thai Life

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

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

Diversification Opportunities for PTT Oil and Thai Life

-0.52

Correlation Coefficient

PTT Oil  Thai Life

Excellent diversification

The 3 months correlation between PTT and Thai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PTT Oil and and Thai Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Life Insurance and PTT Oil 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 Oil and are associated (or correlated) with Thai Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Life Insurance has no effect on the direction of PTT Oil i.e., PTT Oil and Thai Life go up and down completely randomly.

Pair Corralation between PTT Oil and Thai Life

Assuming the 90 days horizon PTT Oil and is expected to under-perform the Thai Life. But the stock apears to be less risky and, when comparing its historical volatility, PTT Oil and is 1.01 times less risky than Thai Life. The stock trades about -0.11 of its potential returns per unit of risk. The Thai Life Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,070  in Thai Life Insurance on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Thai Life Insurance or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

PTT Oil and  vs.  Thai Life Insurance

PTT Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTT Oil and 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Life Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Life Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Thai Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PTT Oil and Thai Life

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

The idea behind PTT Oil and and Thai Life Insurance 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.