Correlation Between BEC World and Erawan
Can any of the company-specific risk be diversified away by investing in both BEC World 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 BEC World and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEC World Public and The Erawan Group, you can compare the effects of market volatilities on BEC World 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 BEC World with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEC World and Erawan.
Diversification Opportunities for BEC World and Erawan
Almost no diversification
The 3 months correlation between BEC and Erawan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BEC World 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 BEC World 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 BEC World 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 BEC World i.e., BEC World and Erawan go up and down completely randomly.
Pair Corralation between BEC World and Erawan
Assuming the 90 days trading horizon BEC World Public is expected to under-perform the Erawan. But the stock apears to be less risky and, when comparing its historical volatility, BEC World Public is 1.17 times less risky than Erawan. The stock trades about -0.16 of its potential returns per unit of risk. The The Erawan Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 410.00 in The Erawan Group on September 2, 2024 and sell it today you would lose (10.00) from holding The Erawan Group or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEC World Public vs. The Erawan Group
Performance |
| Timeline |
| BEC World Public |
| Erawan Group |
BEC World and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BEC World and Erawan
The main advantage of trading using opposite BEC World and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEC World 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.| BEC World vs. Bangkok Chain Hospital | BEC World vs. Grande Asset Hotels | BEC World vs. Better World Green | BEC World vs. Chularat Hospital Public |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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