Correlation Between PTT Global and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both PTT Global and Sanyo 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 Sanyo 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on PTT Global and Sanyo 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Global and Sanyo Chemical.
Diversification Opportunities for PTT Global and Sanyo Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PTT and Sanyo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PTT Global Chemical and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of PTT Global i.e., PTT Global and Sanyo Chemical go up and down completely randomly.
Pair Corralation between PTT Global and Sanyo Chemical
Assuming the 90 days trading horizon PTT Global Chemical is expected to generate 19.83 times more return on investment than Sanyo Chemical. However, PTT Global is 19.83 times more volatile than Sanyo Chemical Industries. It trades about 0.05 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.02 per unit of risk. If you would invest 84.00 in PTT Global Chemical on August 28, 2024 and sell it today you would lose (18.00) from holding PTT Global Chemical or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PTT Global Chemical vs. Sanyo Chemical Industries
Performance |
| Timeline |
| PTT Global Chemical |
| Sanyo Chemical Industries |
PTT Global and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTT Global and Sanyo Chemical
The main advantage of trading using opposite PTT Global and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTT Global position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.The idea behind PTT Global Chemical and Sanyo Chemical Industries 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.| Sanyo Chemical vs. PPG Industries | Sanyo Chemical vs. Albemarle | Sanyo Chemical vs. Superior Plus Corp | Sanyo Chemical vs. NMI Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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