Correlation Between Thai Oil and TPI Polene
Can any of the company-specific risk be diversified away by investing in both Thai Oil and TPI Polene 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 TPI Polene 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 TPI Polene Public, you can compare the effects of market volatilities on Thai Oil and TPI Polene 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 TPI Polene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Oil and TPI Polene.
Diversification Opportunities for Thai Oil and TPI Polene
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thai and TPI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thai Oil Public and TPI Polene Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPI Polene 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 TPI Polene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPI Polene Public has no effect on the direction of Thai Oil i.e., Thai Oil and TPI Polene go up and down completely randomly.
Pair Corralation between Thai Oil and TPI Polene
Assuming the 90 days trading horizon Thai Oil Public is expected to generate 1.35 times more return on investment than TPI Polene. However, Thai Oil is 1.35 times more volatile than TPI Polene Public. It trades about -0.02 of its potential returns per unit of risk. TPI Polene Public is currently generating about -0.05 per unit of risk. If you would invest 4,820 in Thai Oil Public on September 2, 2024 and sell it today you would lose (1,045) from holding Thai Oil Public or give up 21.68% 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. TPI Polene Public
Performance |
| Timeline |
| Thai Oil Public |
| TPI Polene Public |
Thai Oil and TPI Polene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Oil and TPI Polene
The main advantage of trading using opposite Thai Oil and TPI Polene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Oil position performs unexpectedly, TPI Polene 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 TPI Polene will offset losses from the drop in TPI Polene's long position.| Thai Oil vs. Sawang Export Public | Thai Oil vs. Quality Houses Hotel | Thai Oil vs. Grande Hospitality Real | Thai Oil vs. City Steel 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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