Correlation Between PTT PCL and BP Plc

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

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

Diversification Opportunities for PTT PCL and BP Plc

-0.75

Correlation Coefficient

PTT PCL  BP Plc

Pay attention - limited upside

The 3 months correlation between PTT and BPAQF is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PTT PCL ADR and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and PTT PCL 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 PCL ADR are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of PTT PCL i.e., PTT PCL and BP Plc go up and down completely randomly.

Pair Corralation between PTT PCL and BP Plc

Assuming the 90 days horizon PTT PCL ADR is expected to generate 0.48 times more return on investment than BP Plc. However, PTT PCL ADR is 2.07 times less risky than BP Plc. It trades about 0.13 of its potential returns per unit of risk. BP plc is currently generating about -0.04 per unit of risk. If you would invest  468.00  in PTT PCL ADR on September 14, 2024 and sell it today you would earn a total of  41.00  from holding PTT PCL ADR or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

PTT PCL ADR  vs.  BP plc

PTT PCL ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTT PCL ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, PTT PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BP plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BP Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PTT PCL and BP Plc

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

The idea behind PTT PCL ADR and BP plc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .