Correlation Between Thai Oil and Sea Oil
Can any of the company-specific risk be diversified away by investing in both Thai Oil and Sea 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 Thai Oil and Sea Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Oil Public and Sea Oil Public, you can compare the effects of market volatilities on Thai Oil and Sea 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 Thai Oil with a short position of Sea Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Sea Oil.
Diversification Opportunities for Thai Oil and Sea Oil
Good diversification
The 3 months correlation between Thai and Sea is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Sea Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Oil Public and Thai Oil 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 Thai Oil Public are associated (or correlated) with Sea Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Oil Public has no effect on the direction of Thai Oil i.e., Thai Oil and Sea Oil go up and down completely randomly.
Pair Corralation between Thai Oil and Sea Oil
Assuming the 90 days trading horizon Thai Oil Public is expected to generate 114.51 times more return on investment than Sea Oil. However, Thai Oil is 114.51 times more volatile than Sea Oil Public. It trades about 0.17 of its potential returns per unit of risk. Sea Oil Public is currently generating about 0.05 per unit of risk. If you would invest 0.00 in Thai Oil Public on September 3, 2024 and sell it today you would earn a total of 3,775 from holding Thai Oil Public or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Oil Public vs. Sea Oil Public
Performance |
| Timeline |
| Thai Oil Public |
| Sea Oil Public |
Thai Oil and Sea Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Oil and Sea Oil
The main advantage of trading using opposite Thai Oil and Sea Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil position performs unexpectedly, Sea 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 Sea Oil will offset losses from the drop in Sea Oil's long position.| Thai Oil vs. PTT Oil and | Thai Oil vs. Thai Oil Public | Thai Oil vs. IRPC Public | Thai Oil vs. Star Petroleum Refining |
| Sea Oil vs. PTT Oil and | Sea Oil vs. Thai Oil Public | Sea Oil vs. Thai Oil Public | Sea Oil vs. IRPC Public |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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