Correlation Between Thai Poly and Thai OPP

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

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

Diversification Opportunities for Thai Poly and Thai OPP

0.8

Correlation Coefficient

Thai Poly  Thai OPP

Very poor diversification

The 3 months correlation between Thai and Thai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thai Poly Acrylic and Thai OPP Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai OPP Public and Thai Poly 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 Poly Acrylic are associated (or correlated) with Thai OPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai OPP Public has no effect on the direction of Thai Poly i.e., Thai Poly and Thai OPP go up and down completely randomly.

Pair Corralation between Thai Poly and Thai OPP

Assuming the 90 days trading horizon Thai Poly Acrylic is expected to under-perform the Thai OPP. In addition to that, Thai Poly is 19.56 times more volatile than Thai OPP Public. It trades about -0.06 of its total potential returns per unit of risk. Thai OPP Public is currently generating about -0.18 per unit of volatility. If you would invest  17,200  in Thai OPP Public on October 22, 2024 and sell it today you would lose (500.00) from holding Thai OPP Public or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Thai Poly Acrylic  vs.  Thai OPP Public

Thai Poly Acrylic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Poly Acrylic 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 basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai OPP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai OPP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Thai OPP is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thai Poly and Thai OPP

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

The idea behind Thai Poly Acrylic and Thai OPP 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.