Correlation Between Quality Houses and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Quality Houses and Thai Oil 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 Quality Houses and Thai Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quality Houses Hotel and Thai Oil Public, you can compare the effects of market volatilities on Quality Houses and Thai Oil 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 Quality Houses with a short position of Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Houses and Thai Oil.
Diversification Opportunities for Quality Houses and Thai Oil
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Quality and Thai is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Hotel and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Quality Houses 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 Quality Houses Hotel are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Quality Houses i.e., Quality Houses and Thai Oil go up and down completely randomly.
Pair Corralation between Quality Houses and Thai Oil
Assuming the 90 days trading horizon Quality Houses Hotel is expected to under-perform the Thai Oil. In addition to that, Quality Houses is 6.79 times more volatile than Thai Oil Public. It trades about -0.16 of its total potential returns per unit of risk. Thai Oil Public is currently generating about -0.28 per unit of volatility. If you would invest 5,000 in Thai Oil Public on September 3, 2024 and sell it today you would lose (1,225) from holding Thai Oil Public or give up 24.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Quality Houses Hotel vs. Thai Oil Public
Performance |
| Timeline |
| Quality Houses Hotel |
| Thai Oil Public |
Quality Houses and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quality Houses and Thai Oil
The main advantage of trading using opposite Quality Houses and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quality Houses position performs unexpectedly, Thai Oil 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 Thai Oil will offset losses from the drop in Thai Oil's long position.| Quality Houses vs. Quality Houses Property | Quality Houses vs. Land and Houses | Quality Houses vs. WHA Premium Growth | Quality Houses vs. LH Hotel Leasehold |
| Thai Oil vs. PTT Public | Thai Oil vs. SCB X Public | Thai Oil vs. The Siam Commercial | Thai Oil vs. The Siam Cement |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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