Correlation Between Ratch Group and PTG Energy
Can any of the company-specific risk be diversified away by investing in both Ratch Group and PTG Energy 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 Ratch Group and PTG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratch Group Public and PTG Energy PCL, you can compare the effects of market volatilities on Ratch Group and PTG Energy 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 Ratch Group with a short position of PTG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratch Group and PTG Energy.
Diversification Opportunities for Ratch Group and PTG Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ratch and PTG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group Public and PTG Energy PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTG Energy PCL and Ratch Group 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 Ratch Group Public are associated (or correlated) with PTG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTG Energy PCL has no effect on the direction of Ratch Group i.e., Ratch Group and PTG Energy go up and down completely randomly.
Pair Corralation between Ratch Group and PTG Energy
Assuming the 90 days trading horizon Ratch Group Public is expected to under-perform the PTG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ratch Group Public is 1.23 times less risky than PTG Energy. The stock trades about -0.17 of its potential returns per unit of risk. The PTG Energy PCL is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 930.00 in PTG Energy PCL on August 25, 2024 and sell it today you would lose (25.00) from holding PTG Energy PCL or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ratch Group Public vs. PTG Energy PCL
Performance |
| Timeline |
| Ratch Group Public |
| PTG Energy PCL |
Ratch Group and PTG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ratch Group and PTG Energy
The main advantage of trading using opposite Ratch Group and PTG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratch Group position performs unexpectedly, PTG Energy 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 PTG Energy will offset losses from the drop in PTG Energy's long position.| Ratch Group vs. WHA Public | Ratch Group vs. TPI Polene Power | Ratch Group vs. Bangkok Expressway and | Ratch Group vs. BGrimm Power Public |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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