Correlation Between Bangkok Bank and PTT Oil
Can any of the company-specific risk be diversified away by investing in both Bangkok Bank and PTT 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 Bangkok Bank and PTT Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bangkok Bank Public and PTT Oil and, you can compare the effects of market volatilities on Bangkok Bank and PTT 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 Bangkok Bank with a short position of PTT Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Bank and PTT Oil.
Diversification Opportunities for Bangkok Bank and PTT Oil
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bangkok and PTT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Bank Public and PTT Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Oil and Bangkok Bank 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 Bangkok Bank Public are associated (or correlated) with PTT Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Oil has no effect on the direction of Bangkok Bank i.e., Bangkok Bank and PTT Oil go up and down completely randomly.
Pair Corralation between Bangkok Bank and PTT Oil
Assuming the 90 days trading horizon Bangkok Bank Public is expected to generate 0.41 times more return on investment than PTT Oil. However, Bangkok Bank Public is 2.41 times less risky than PTT Oil. It trades about 0.09 of its potential returns per unit of risk. PTT Oil and is currently generating about -0.18 per unit of risk. If you would invest 14,700 in Bangkok Bank Public on August 31, 2024 and sell it today you would earn a total of 250.00 from holding Bangkok Bank Public or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bangkok Bank Public vs. PTT Oil and
Performance |
| Timeline |
| Bangkok Bank Public |
| PTT Oil |
Bangkok Bank and PTT Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bangkok Bank and PTT Oil
The main advantage of trading using opposite Bangkok Bank and PTT Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Bank position performs unexpectedly, PTT 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 PTT Oil will offset losses from the drop in PTT Oil's long position.The idea behind Bangkok Bank Public and PTT Oil and 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.| PTT Oil vs. PTT Public | PTT Oil vs. CP ALL Public | PTT Oil vs. Kasikornbank Public | PTT Oil vs. Airports of Thailand |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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