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
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dynasty and Erawan is 0.91. 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 generate 0.83 times more return on investment than Erawan. However, Dynasty Ceramic Public is 1.21 times less risky than Erawan. It trades about 0.0 of its potential returns per unit of risk. The Erawan Group is currently generating about -0.18 per unit of risk. If you would invest 167.00 in Dynasty Ceramic Public on October 21, 2024 and sell it today you would lose (1.00) from holding Dynasty Ceramic Public or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| 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.The idea behind Dynasty Ceramic Public and The Erawan Group 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.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. Bangkok Dusit Medical |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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