Correlation Between Thai Oil and Delta Electronics

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

Diversification Opportunities for Thai Oil and Delta Electronics

0.39

Correlation Coefficient

Thai Oil  Delta Electronics

Weak diversification

The 3 months correlation between Thai and Delta is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of Thai Oil i.e., Thai Oil and Delta Electronics go up and down completely randomly.

Pair Corralation between Thai Oil and Delta Electronics

Assuming the 90 days trading horizon Thai Oil Public is expected to generate 0.67 times more return on investment than Delta Electronics. However, Thai Oil Public is 1.48 times less risky than Delta Electronics. It trades about 0.04 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.24 per unit of risk. If you would invest  2,477  in Thai Oil Public on December 21, 2024 and sell it today you would earn a total of  148.00  from holding Thai Oil Public or generate 5.97% return on investment over 90 days.

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

Thai Oil Public  vs.  Delta Electronics Public

Thai Oil Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Thai Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Thai Oil and Delta Electronics

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

The idea behind Thai Oil Public and Delta Electronics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.