Correlation Between Thai Oil and Sea Oil

Can any of the company-specific risk be diversified away by investing in both Thai Oil and Sea 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 Thai Oil and Sea Oil 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 Sea Oil Public, you can compare the effects of market volatilities on Thai Oil and Sea 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 Thai Oil with a short position of Sea Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Sea Oil.

Diversification Opportunities for Thai Oil and Sea Oil

0.29

Correlation Coefficient

Thai Oil  Sea Oil

Modest diversification

The 3 months correlation between Thai and Sea is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Sea Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Oil 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 Sea Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Oil Public has no effect on the direction of Thai Oil i.e., Thai Oil and Sea Oil go up and down completely randomly.

Pair Corralation between Thai Oil and Sea Oil

If you would invest  250.00  in Sea Oil Public on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Sea Oil Public or generate 3.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.0%
Values	Daily Returns

Thai Oil Public  vs.  Sea Oil Public

Thai Oil Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sea Oil Public

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sea Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thai Oil and Sea Oil

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

The idea behind Thai Oil Public and Sea 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.