Correlation Between Thai Oil and Ditto Public

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

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

Diversification Opportunities for Thai Oil and Ditto Public

0.38

Correlation Coefficient

Thai Oil  Ditto Public

Weak diversification

The 3 months correlation between Thai and Ditto is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Ditto Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ditto Public and Thai Oil 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 Thai Oil Public are associated (or correlated) with Ditto Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ditto Public has no effect on the direction of Thai Oil i.e., Thai Oil and Ditto Public go up and down completely randomly.

Pair Corralation between Thai Oil and Ditto Public

Assuming the 90 days trading horizon Thai Oil Public is expected to generate 27.81 times more return on investment than Ditto Public. However, Thai Oil is 27.81 times more volatile than Ditto Public. It trades about 0.08 of its potential returns per unit of risk. Ditto Public is currently generating about -0.07 per unit of risk. If you would invest  5,325  in Thai Oil Public on September 24, 2024 and sell it today you would lose (1,825) from holding Thai Oil Public or give up 34.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.58%
Values	Daily Returns

Thai Oil Public  vs.  Ditto Public

Thai Oil Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thai Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Ditto Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ditto Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Thai Oil and Ditto Public

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

The idea behind Thai Oil Public and Ditto 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.