Correlation Between PTT Public and LH Financial

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

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

Diversification Opportunities for PTT Public and LH Financial

0.77

Correlation Coefficient

PTT Public  LH Financial

Poor diversification

The 3 months correlation between PTT and LHFG is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PTT Public and LH Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Financial Group and PTT Public 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 Public are associated (or correlated) with LH Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Financial Group has no effect on the direction of PTT Public i.e., PTT Public and LH Financial go up and down completely randomly.

Pair Corralation between PTT Public and LH Financial

Assuming the 90 days trading horizon PTT Public is expected to under-perform the LH Financial. But the stock apears to be less risky and, when comparing its historical volatility, PTT Public is 1.08 times less risky than LH Financial. The stock trades about -0.22 of its potential returns per unit of risk. The LH Financial Group is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  80.00  in LH Financial Group on September 27, 2024 and sell it today you would lose (2.00) from holding LH Financial Group or give up 2.5% of portfolio value over 90 days.

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

PTT Public  vs.  LH Financial Group

PTT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

LH Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PTT Public and LH Financial

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

The idea behind PTT Public and LH Financial Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.