Correlation Between Lamar Advertising and PTT Global
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and PTT Global 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 Lamar Advertising and PTT Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and PTT Global Chemical, you can compare the effects of market volatilities on Lamar Advertising and PTT Global 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 Lamar Advertising with a short position of PTT Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and PTT Global.
Diversification Opportunities for Lamar Advertising and PTT Global
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lamar and PTT is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and PTT Global Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Global Chemical and Lamar Advertising 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 Lamar Advertising are associated (or correlated) with PTT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Global Chemical has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and PTT Global go up and down completely randomly.
Pair Corralation between Lamar Advertising and PTT Global
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 5.77 times less return on investment than PTT Global. But when comparing it to its historical volatility, Lamar Advertising is 10.92 times less risky than PTT Global. It trades about 0.06 of its potential returns per unit of risk. PTT Global Chemical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 95.00 in PTT Global Chemical on August 29, 2024 and sell it today you would lose (30.00) from holding PTT Global Chemical or give up 31.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. PTT Global Chemical
Performance |
| Timeline |
| Lamar Advertising |
| PTT Global Chemical |
Lamar Advertising and PTT Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and PTT Global
The main advantage of trading using opposite Lamar Advertising and PTT Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, PTT Global 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 PTT Global will offset losses from the drop in PTT Global's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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