Correlation Between Airports and Sea Oil
Can any of the company-specific risk be diversified away by investing in both Airports 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 Airports and Sea Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Sea Oil Public, you can compare the effects of market volatilities on Airports 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 Airports with a short position of Sea Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Sea Oil.
Diversification Opportunities for Airports and Sea Oil
Modest diversification
The 3 months correlation between Airports and Sea is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand 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 Airports 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 Airports of Thailand 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 Airports i.e., Airports and Sea Oil go up and down completely randomly.
Pair Corralation between Airports and Sea Oil
Assuming the 90 days trading horizon Airports is expected to generate 149.03 times less return on investment than Sea Oil. But when comparing it to its historical volatility, Airports of Thailand is 54.07 times less risky than Sea Oil. It trades about 0.02 of its potential returns per unit of risk. Sea Oil Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 279.00 in Sea Oil Public on August 25, 2024 and sell it today you would lose (7.00) from holding Sea Oil Public or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Sea Oil Public
Performance |
| Timeline |
| Airports of Thailand |
| Sea Oil Public |
Airports and Sea Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Sea Oil
The main advantage of trading using opposite Airports and Sea Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports 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.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Sea Oil vs. Krung Thai Bank | Sea Oil vs. Thai Union Group | Sea Oil vs. PTT Public | Sea Oil vs. PTT Exploration and |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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