Correlation Between Thai Oil and Lanna Resources
Can any of the company-specific risk be diversified away by investing in both Thai Oil and Lanna Resources 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 Lanna Resources 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 Lanna Resources Public, you can compare the effects of market volatilities on Thai Oil and Lanna Resources 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 Lanna Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and Lanna Resources.
Diversification Opportunities for Thai Oil and Lanna Resources
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thai and Lanna is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and Lanna Resources Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanna Resources 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 Lanna Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanna Resources Public has no effect on the direction of Thai Oil i.e., Thai Oil and Lanna Resources go up and down completely randomly.
Pair Corralation between Thai Oil and Lanna Resources
Assuming the 90 days trading horizon Thai Oil Public is expected to under-perform the Lanna Resources. In addition to that, Thai Oil is 3.04 times more volatile than Lanna Resources Public. It trades about -0.37 of its total potential returns per unit of risk. Lanna Resources Public is currently generating about -0.14 per unit of volatility. If you would invest 1,620 in Lanna Resources Public on September 4, 2024 and sell it today you would lose (30.00) from holding Lanna Resources Public or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Oil Public vs. Lanna Resources Public
Performance |
| Timeline |
| Thai Oil Public |
| Lanna Resources Public |
Thai Oil and Lanna Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Oil and Lanna Resources
The main advantage of trading using opposite Thai Oil and Lanna Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil position performs unexpectedly, Lanna Resources 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 Lanna Resources will offset losses from the drop in Lanna Resources' long position.| Thai Oil vs. PTT Public | Thai Oil vs. SCB X Public | Thai Oil vs. The Siam Commercial | Thai Oil vs. The Siam Cement |
| Lanna Resources vs. PTT Public | Lanna Resources vs. SCB X Public | Lanna Resources vs. The Siam Commercial | Lanna Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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