Correlation Between City Steel and PTT Public
Can any of the company-specific risk be diversified away by investing in both City Steel and PTT Public 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 City Steel and PTT Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Steel Public and PTT Public, you can compare the effects of market volatilities on City Steel and PTT Public 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 City Steel with a short position of PTT Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and PTT Public.
Diversification Opportunities for City Steel and PTT Public
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between City and PTT is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and PTT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Public and City Steel 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 City Steel Public are associated (or correlated) with PTT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Public has no effect on the direction of City Steel i.e., City Steel and PTT Public go up and down completely randomly.
Pair Corralation between City Steel and PTT Public
Assuming the 90 days trading horizon City Steel Public is expected to generate 81.98 times more return on investment than PTT Public. However, City Steel is 81.98 times more volatile than PTT Public. It trades about 0.08 of its potential returns per unit of risk. PTT Public is currently generating about 0.02 per unit of risk. If you would invest 216.00 in City Steel Public on August 29, 2024 and sell it today you would lose (27.00) from holding City Steel Public or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Steel Public vs. PTT Public
Performance |
| Timeline |
| City Steel Public |
| PTT Public |
City Steel and PTT Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and PTT Public
The main advantage of trading using opposite City Steel and PTT Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, PTT Public 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 Public will offset losses from the drop in PTT Public's long position.The idea behind City Steel Public and PTT 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.| PTT Public vs. IRPC Public | PTT Public vs. PTT Oil and | PTT Public vs. Power Solution Technologies | PTT Public vs. Star Petroleum Refining |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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