Correlation Between PTT Global and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both PTT Global and Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical, you can compare the effects of market volatilities on PTT Global and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Global and Westlake Chemical.
Diversification Opportunities for PTT Global and Westlake Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PTT and Westlake is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PTT Global Chemical and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of PTT Global i.e., PTT Global and Westlake Chemical go up and down completely randomly.
Pair Corralation between PTT Global and Westlake Chemical
Assuming the 90 days trading horizon PTT Global Chemical is expected to under-perform the Westlake Chemical. In addition to that, PTT Global is 2.61 times more volatile than Westlake Chemical. It trades about -0.03 of its total potential returns per unit of risk. Westlake Chemical is currently generating about -0.06 per unit of volatility. If you would invest 14,183 in Westlake Chemical on September 1, 2024 and sell it today you would lose (2,083) from holding Westlake Chemical or give up 14.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
PTT Global Chemical vs. Westlake Chemical
Performance |
| Timeline |
| PTT Global Chemical |
| Westlake Chemical |
PTT Global and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTT Global and Westlake Chemical
The main advantage of trading using opposite PTT Global and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTT Global position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.The idea behind PTT Global Chemical and Westlake Chemical 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.| Westlake Chemical vs. PENN NATL GAMING | Westlake Chemical vs. GigaMedia | Westlake Chemical vs. HOCHSCHILD MINING | Westlake Chemical vs. TSOGO SUN GAMING |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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