Correlation Between Thai Oil and TPI Polene

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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

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Thai and TPI is -0.13. 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 0.92 times more return on investment than TPI Polene. However, Thai Oil Public is 1.09 times less risky than TPI Polene. It trades about 0.18 of its potential returns per unit of risk. TPI Polene Public is currently generating about -0.04 per unit of risk. If you would invest  2,480  in Thai Oil Public on April 23, 2025 and sell it today you would earn a total of  695.00  from holding Thai Oil Public or generate 28.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Thai Oil Public  vs.  TPI Polene Public

 Performance 
       Timeline  
Thai Oil Public 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Thai Oil Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Thai Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.
TPI Polene Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days TPI Polene Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.
The idea behind Thai Oil Public and TPI Polene Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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