Correlation Between PTT Global and First American
Can any of the company-specific risk be diversified away by investing in both PTT Global and First American 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 First American 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 First American Financial, you can compare the effects of market volatilities on PTT Global and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTT Global and First American.
Diversification Opportunities for PTT Global and First American
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PTT and First is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PTT Global Chemical and First American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Financial 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Financial has no effect on the direction of PTT Global i.e., PTT Global and First American go up and down completely randomly.
Pair Corralation between PTT Global and First American
Assuming the 90 days trading horizon PTT Global Chemical is expected to generate 17.87 times more return on investment than First American. However, PTT Global is 17.87 times more volatile than First American Financial. It trades about 0.05 of its potential returns per unit of risk. First American Financial is currently generating about 0.04 per unit of risk. If you would invest 98.00 in PTT Global Chemical on September 14, 2024 and sell it today you would lose (33.00) from holding PTT Global Chemical or give up 33.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PTT Global Chemical vs. First American Financial
Performance |
| Timeline |
| PTT Global Chemical |
| First American Financial |
PTT Global and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PTT Global and First American
The main advantage of trading using opposite PTT Global and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTT Global position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| PTT Global vs. Cleanaway Waste Management | PTT Global vs. Sims Metal Management | PTT Global vs. Jupiter Fund Management | PTT Global vs. T MOBILE US |
| First American vs. FARO Technologies | First American vs. Uber Technologies | First American vs. Jacquet Metal Service | First American vs. ADRIATIC METALS LS 013355 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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