Correlation Between Supalai Public and Thai Oil

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

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

Diversification Opportunities for Supalai Public and Thai Oil

0.96

Correlation Coefficient

Supalai Public  Thai Oil

Almost no diversification

The 3 months correlation between Supalai and Thai is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Supalai Public and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Supalai 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 Supalai Public are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Supalai Public i.e., Supalai Public and Thai Oil go up and down completely randomly.

Pair Corralation between Supalai Public and Thai Oil

Assuming the 90 days trading horizon Supalai Public is expected to generate 1.0 times more return on investment than Thai Oil. However, Supalai Public is 1.0 times less risky than Thai Oil. It trades about 0.16 of its potential returns per unit of risk. Thai Oil Public is currently generating about 0.16 per unit of risk. If you would invest  2,119  in Supalai Public on August 31, 2024 and sell it today you would lose (219.00) from holding Supalai Public or give up 10.34% of portfolio value over 90 days.

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

Supalai Public  vs.  Thai Oil Public

Supalai Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Supalai Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting essential indicators, Supalai Public reported solid returns over the last few months and may actually be approaching a breakup point.

Thai Oil Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Thai Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Supalai Public and Thai Oil

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

The idea behind Supalai Public and Thai Oil Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.