Correlation Between Erawan and Thai Energy
Can any of the company-specific risk be diversified away by investing in both Erawan and Thai Energy 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 Erawan and Thai Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Erawan Group and Thai Energy Storage, you can compare the effects of market volatilities on Erawan and Thai Energy 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 Erawan with a short position of Thai Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Thai Energy.
Diversification Opportunities for Erawan and Thai Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Erawan and Thai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Thai Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Energy Storage and Erawan 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 The Erawan Group are associated (or correlated) with Thai Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Energy Storage has no effect on the direction of Erawan i.e., Erawan and Thai Energy go up and down completely randomly.
Pair Corralation between Erawan and Thai Energy
Assuming the 90 days trading horizon The Erawan Group is expected to generate 6.8 times more return on investment than Thai Energy. However, Erawan is 6.8 times more volatile than Thai Energy Storage. It trades about 0.11 of its potential returns per unit of risk. Thai Energy Storage is currently generating about 0.07 per unit of risk. If you would invest 392.00 in The Erawan Group on August 25, 2024 and sell it today you would earn a total of 20.00 from holding The Erawan Group or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Erawan Group vs. Thai Energy Storage
Performance |
| Timeline |
| Erawan Group |
| Thai Energy Storage |
Erawan and Thai Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Thai Energy
The main advantage of trading using opposite Erawan and Thai Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Thai Energy 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 Thai Energy will offset losses from the drop in Thai Energy's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Thai Energy vs. AJ Advance Technology | Thai Energy vs. Asia Precision Public | Thai Energy vs. Asia Metal Public | Thai Energy vs. The Erawan Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |