Correlation Between Power Solution and PTT Oil

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

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

Diversification Opportunities for Power Solution and PTT Oil

0.46

Correlation Coefficient

Power Solution  PTT Oil

Very weak diversification

The 3 months correlation between Power and PTT is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and PTT Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Oil and Power Solution 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 Power Solution Technologies are associated (or correlated) with PTT Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Oil has no effect on the direction of Power Solution i.e., Power Solution and PTT Oil go up and down completely randomly.

Pair Corralation between Power Solution and PTT Oil

Assuming the 90 days trading horizon Power Solution Technologies is expected to generate 0.7 times more return on investment than PTT Oil. However, Power Solution Technologies is 1.43 times less risky than PTT Oil. It trades about -0.03 of its potential returns per unit of risk. PTT Oil and is currently generating about -0.08 per unit of risk. If you would invest  49.00  in Power Solution Technologies on December 28, 2024 and sell it today you would lose (2.00) from holding Power Solution Technologies or give up 4.08% of portfolio value over 90 days.

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

Power Solution Technologies  vs.  PTT Oil and

Power Solution Techn

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Solution Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Power Solution is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Power Solution and PTT Oil

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

The idea behind Power Solution Technologies and PTT Oil 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.