Correlation Between Star Petroleum and PTT Exploration

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

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

Diversification Opportunities for Star Petroleum and PTT Exploration

-0.05

Correlation Coefficient

Star Petroleum  PTT Exploration

Good diversification

The 3 months correlation between Star and PTT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Star Petroleum Refining and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and Star Petroleum 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 Star Petroleum Refining 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 Star Petroleum i.e., Star Petroleum and PTT Exploration go up and down completely randomly.

Pair Corralation between Star Petroleum and PTT Exploration

Assuming the 90 days trading horizon Star Petroleum Refining is expected to under-perform the PTT Exploration. In addition to that, Star Petroleum is 1.51 times more volatile than PTT Exploration and. It trades about -0.04 of its total potential returns per unit of risk. PTT Exploration and is currently generating about 0.02 per unit of volatility. If you would invest  11,316  in PTT Exploration and on December 23, 2024 and sell it today you would earn a total of  134.00  from holding PTT Exploration and or generate 1.18% return on investment over 90 days.

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

Star Petroleum Refining  vs.  PTT Exploration and

Star Petroleum Refining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star Petroleum Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PTT Exploration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, PTT Exploration is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Star Petroleum and PTT Exploration

The main advantage of trading using opposite Star Petroleum and PTT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Petroleum 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 Star Petroleum Refining 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 Valuation module to check real value of public entities based on technical and fundamental data.