Correlation Between AAPICO Hitech and Erawan
Can any of the company-specific risk be diversified away by investing in both AAPICO Hitech and Erawan 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 AAPICO Hitech and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAPICO Hitech Public and The Erawan Group, you can compare the effects of market volatilities on AAPICO Hitech and Erawan 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 AAPICO Hitech with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAPICO Hitech and Erawan.
Diversification Opportunities for AAPICO Hitech and Erawan
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAPICO and Erawan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and AAPICO Hitech 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 AAPICO Hitech Public are associated (or correlated) with Erawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erawan Group has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and Erawan go up and down completely randomly.
Pair Corralation between AAPICO Hitech and Erawan
Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the Erawan. But the stock apears to be less risky and, when comparing its historical volatility, AAPICO Hitech Public is 19.6 times less risky than Erawan. The stock trades about -0.03 of its potential returns per unit of risk. The The Erawan Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 441.00 in The Erawan Group on September 14, 2024 and sell it today you would lose (41.00) from holding The Erawan Group or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAPICO Hitech Public vs. The Erawan Group
Performance |
| Timeline |
| AAPICO Hitech Public |
| Erawan Group |
AAPICO Hitech and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAPICO Hitech and Erawan
The main advantage of trading using opposite AAPICO Hitech and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAPICO Hitech position performs unexpectedly, Erawan 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 Erawan will offset losses from the drop in Erawan's long position.| AAPICO Hitech vs. Techno Medical Public | AAPICO Hitech vs. DOHOME | AAPICO Hitech vs. Turnkey Communication Services | AAPICO Hitech vs. Bangkok Dusit Medical |
| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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