Correlation Between Central Plaza and Ekarat Engineering
Can any of the company-specific risk be diversified away by investing in both Central Plaza and Ekarat Engineering 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 Central Plaza and Ekarat Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Plaza Hotel and Ekarat Engineering Public, you can compare the effects of market volatilities on Central Plaza and Ekarat Engineering 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 Central Plaza with a short position of Ekarat Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Plaza and Ekarat Engineering.
Diversification Opportunities for Central Plaza and Ekarat Engineering
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Central and Ekarat is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Central Plaza Hotel and Ekarat Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekarat Engineering Public and Central Plaza 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 Central Plaza Hotel are associated (or correlated) with Ekarat Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekarat Engineering Public has no effect on the direction of Central Plaza i.e., Central Plaza and Ekarat Engineering go up and down completely randomly.
Pair Corralation between Central Plaza and Ekarat Engineering
Assuming the 90 days trading horizon Central Plaza Hotel is expected to under-perform the Ekarat Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Central Plaza Hotel is 37.51 times less risky than Ekarat Engineering. The stock trades about -0.03 of its potential returns per unit of risk. The Ekarat Engineering Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Ekarat Engineering Public on September 3, 2024 and sell it today you would lose (3.00) from holding Ekarat Engineering Public or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Plaza Hotel vs. Ekarat Engineering Public
Performance |
| Timeline |
| Central Plaza Hotel |
| Ekarat Engineering Public |
Central Plaza and Ekarat Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Plaza and Ekarat Engineering
The main advantage of trading using opposite Central Plaza and Ekarat Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Plaza position performs unexpectedly, Ekarat Engineering 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 Ekarat Engineering will offset losses from the drop in Ekarat Engineering's long position.| Central Plaza vs. Central Pattana Public | Central Plaza vs. CP ALL Public | Central Plaza vs. Bangkok Dusit Medical | Central Plaza vs. Airports of Thailand |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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