Correlation Between Airports and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Airports and Thai 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 Thai 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 Thai Oil Public, you can compare the effects of market volatilities on Airports and Thai 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 Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Thai Oil.
Diversification Opportunities for Airports and Thai Oil
Significant diversification
The 3 months correlation between Airports and Thai is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai 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 Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Airports i.e., Airports and Thai Oil go up and down completely randomly.
Pair Corralation between Airports and Thai Oil
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.38 times more return on investment than Thai Oil. However, Airports of Thailand is 2.67 times less risky than Thai Oil. It trades about -0.01 of its potential returns per unit of risk. Thai Oil Public is currently generating about -0.21 per unit of risk. If you would invest 6,175 in Airports of Thailand on August 27, 2024 and sell it today you would lose (25.00) from holding Airports of Thailand or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Thai Oil Public
Performance |
| Timeline |
| Airports of Thailand |
| Thai Oil Public |
Airports and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Thai Oil
The main advantage of trading using opposite Airports and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Thai 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 Thai Oil will offset losses from the drop in Thai Oil's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Thai Oil vs. Krung Thai Bank | Thai Oil vs. Thai Union Group | Thai Oil vs. PTT Public | Thai 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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