Correlation Between EOG Resources and PTT Exploration

Can any of the company-specific risk be diversified away by investing in both EOG Resources and PTT Exploration 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 EOG Resources and PTT Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG Resources and PTT Exploration Production, you can compare the effects of market volatilities on EOG Resources and PTT Exploration 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 EOG Resources with a short position of PTT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and PTT Exploration.

Diversification Opportunities for EOG Resources and PTT Exploration

-0.51

Correlation Coefficient

EOG Resources  PTT Exploration

Excellent diversification

The 3 months correlation between EOG and PTT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and PTT Exploration Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration Prod and EOG Resources 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 EOG Resources are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration Prod has no effect on the direction of EOG Resources i.e., EOG Resources and PTT Exploration go up and down completely randomly.

Pair Corralation between EOG Resources and PTT Exploration

Considering the 90-day investment horizon EOG Resources is expected to generate 0.09 times more return on investment than PTT Exploration. However, EOG Resources is 11.34 times less risky than PTT Exploration. It trades about 0.51 of its potential returns per unit of risk. PTT Exploration Production is currently generating about 0.0 per unit of risk. If you would invest  11,130  in EOG Resources on January 25, 2024 and sell it today you would earn a total of  2,350  from holding EOG Resources or generate 21.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EOG Resources  vs.  PTT Exploration Production

EOG Resources

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, EOG Resources reported solid returns over the last few months and may actually be approaching a breakup point.

PTT Exploration Prod

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Exploration Production has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EOG Resources and PTT Exploration

The main advantage of trading using opposite EOG Resources and PTT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, PTT Exploration 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 PTT Exploration will offset losses from the drop in PTT Exploration's long position.

The idea behind EOG Resources and PTT Exploration Production 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.