Correlation Between Thai Oil and Eastern Technical
Can any of the company-specific risk be diversified away by investing in both Thai Oil and Eastern Technical 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 Eastern Technical 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 Eastern Technical Engineering, you can compare the effects of market volatilities on Thai Oil and Eastern Technical 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 Eastern Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Eastern Technical.
Diversification Opportunities for Thai Oil and Eastern Technical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thai and Eastern is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical 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 Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of Thai Oil i.e., Thai Oil and Eastern Technical go up and down completely randomly.
Pair Corralation between Thai Oil and Eastern Technical
Assuming the 90 days trading horizon Thai Oil Public is expected to generate 1.41 times more return on investment than Eastern Technical. However, Thai Oil is 1.41 times more volatile than Eastern Technical Engineering. It trades about 0.06 of its potential returns per unit of risk. Eastern Technical Engineering is currently generating about 0.04 per unit of risk. If you would invest 5,550 in Thai Oil Public on September 24, 2024 and sell it today you would lose (2,050) from holding Thai Oil Public or give up 36.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.79% |
Values | Daily Returns |
Thai Oil Public vs. Eastern Technical Engineering
Performance |
Timeline |
Thai Oil Public |
Eastern Technical |
Thai Oil and Eastern Technical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thai Oil and Eastern Technical
The main advantage of trading using opposite Thai Oil and Eastern Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil position performs unexpectedly, Eastern Technical 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 Eastern Technical will offset losses from the drop in Eastern Technical's long position.Thai Oil vs. PTT Public | Thai Oil vs. CP ALL Public | Thai Oil vs. Kasikornbank Public | Thai Oil vs. Airports of Thailand |
Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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