Correlation Between Dynasty Ceramic and Erawan
Can any of the company-specific risk be diversified away by investing in both Dynasty Ceramic 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 Dynasty Ceramic and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynasty Ceramic Public and The Erawan Group, you can compare the effects of market volatilities on Dynasty Ceramic 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 Dynasty Ceramic with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynasty Ceramic and Erawan.
Diversification Opportunities for Dynasty Ceramic and Erawan
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynasty and Erawan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dynasty Ceramic 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 Dynasty Ceramic 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 Dynasty Ceramic 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 Dynasty Ceramic i.e., Dynasty Ceramic and Erawan go up and down completely randomly.
Pair Corralation between Dynasty Ceramic and Erawan
Assuming the 90 days trading horizon Dynasty Ceramic Public is expected to under-perform the Erawan. But the stock apears to be less risky and, when comparing its historical volatility, Dynasty Ceramic Public is 2.26 times less risky than Erawan. The stock trades about -0.27 of its potential returns per unit of risk. The The Erawan Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 388.00 in The Erawan Group on September 14, 2024 and sell it today you would earn a total of 12.00 from holding The Erawan Group or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynasty Ceramic Public vs. The Erawan Group
Performance |
| Timeline |
| Dynasty Ceramic Public |
| Erawan Group |
Dynasty Ceramic and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynasty Ceramic and Erawan
The main advantage of trading using opposite Dynasty Ceramic and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynasty Ceramic 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.| Dynasty Ceramic vs. Land and Houses | Dynasty Ceramic vs. AP Public | Dynasty Ceramic vs. Charoen Pokphand Foods | Dynasty Ceramic vs. Hana Microelectronics Public |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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