Correlation Between Thai Oil and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both Thai Oil and Union Petrochemical 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 Union Petrochemical 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 Union Petrochemical Public, you can compare the effects of market volatilities on Thai Oil and Union Petrochemical 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 Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Union Petrochemical.
Diversification Opportunities for Thai Oil and Union Petrochemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thai and Union is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical 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 Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of Thai Oil i.e., Thai Oil and Union Petrochemical go up and down completely randomly.
Pair Corralation between Thai Oil and Union Petrochemical
Assuming the 90 days trading horizon Thai Oil Public is expected to generate 1.42 times more return on investment than Union Petrochemical. However, Thai Oil is 1.42 times more volatile than Union Petrochemical Public. It trades about 0.16 of its potential returns per unit of risk. Union Petrochemical Public is currently generating about 0.11 per unit of risk. If you would invest 4,625 in Thai Oil Public on August 29, 2024 and sell it today you would lose (575.00) from holding Thai Oil Public or give up 12.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Thai Oil Public vs. Union Petrochemical Public
Performance |
| Timeline |
| Thai Oil Public |
| Union Petrochemical |
Thai Oil and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Oil and Union Petrochemical
The main advantage of trading using opposite Thai Oil and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| Thai Oil vs. Krung Thai Bank | Thai Oil vs. Thai Union Group | Thai Oil vs. PTT Public | Thai Oil vs. Supalai Public |
| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. TWZ Public | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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