Correlation Between PTG Energy and PTT Exploration

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

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

Diversification Opportunities for PTG Energy and PTT Exploration

0.01

Correlation Coefficient

PTG Energy  PTT Exploration

Significant diversification

The 3 months correlation between PTG and PTT is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PTG Energy PCL and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and PTG Energy 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 PTG Energy PCL are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of PTG Energy i.e., PTG Energy and PTT Exploration go up and down completely randomly.

Pair Corralation between PTG Energy and PTT Exploration

Assuming the 90 days trading horizon PTG Energy PCL is expected to under-perform the PTT Exploration. But the stock apears to be less risky and, when comparing its historical volatility, PTG Energy PCL is 79.55 times less risky than PTT Exploration. The stock trades about -0.19 of its potential returns per unit of risk. The PTT Exploration and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,471  in PTT Exploration and on September 15, 2024 and sell it today you would lose (2,971) from holding PTT Exploration and or give up 19.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

PTG Energy PCL  vs.  PTT Exploration and

PTG Energy PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTG Energy PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PTT Exploration

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, PTT Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PTG Energy and PTT Exploration

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

The idea behind PTG Energy PCL and PTT Exploration 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.