Correlation Between PTT Global and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both PTT Global and Australian Agricultural 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 PTT Global and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTT Global Chemical and Australian Agricultural, you can compare the effects of market volatilities on PTT Global and Australian Agricultural 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 PTT Global with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Global and Australian Agricultural.
Diversification Opportunities for PTT Global and Australian Agricultural
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PTT and Australian is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PTT Global Chemical and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and PTT Global 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 PTT Global Chemical are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of PTT Global i.e., PTT Global and Australian Agricultural go up and down completely randomly.
Pair Corralation between PTT Global and Australian Agricultural
Assuming the 90 days trading horizon PTT Global Chemical is expected to generate 1.42 times more return on investment than Australian Agricultural. However, PTT Global is 1.42 times more volatile than Australian Agricultural. It trades about 0.12 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.01 per unit of risk. If you would invest 62.00 in PTT Global Chemical on August 28, 2024 and sell it today you would earn a total of 4.00 from holding PTT Global Chemical or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PTT Global Chemical vs. Australian Agricultural
Performance |
| Timeline |
| PTT Global Chemical |
| Australian Agricultural |
PTT Global and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTT Global and Australian Agricultural
The main advantage of trading using opposite PTT Global and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTT Global position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.The idea behind PTT Global Chemical and Australian Agricultural 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.| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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