Correlation Between Erawan and AJ Advance
Can any of the company-specific risk be diversified away by investing in both Erawan and AJ Advance 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 AJ Advance 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 AJ Advance Technology, you can compare the effects of market volatilities on Erawan and AJ Advance 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 AJ Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and AJ Advance.
Diversification Opportunities for Erawan and AJ Advance
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erawan and AJA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology 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 AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Erawan i.e., Erawan and AJ Advance go up and down completely randomly.
Pair Corralation between Erawan and AJ Advance
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.42 times more return on investment than AJ Advance. However, The Erawan Group is 2.4 times less risky than AJ Advance. It trades about 0.01 of its potential returns per unit of risk. AJ Advance Technology is currently generating about -0.16 per unit of risk. If you would invest 400.00 in The Erawan Group on September 1, 2024 and sell it today you would earn a total of 0.00 from holding The Erawan Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. AJ Advance Technology
Performance |
| Timeline |
| Erawan Group |
| AJ Advance Technology |
Erawan and AJ Advance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and AJ Advance
The main advantage of trading using opposite Erawan and AJ Advance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, AJ Advance 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 AJ Advance will offset losses from the drop in AJ Advance's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| AJ Advance vs. TRC Construction Public | AJ Advance vs. Bangkok Expressway and | AJ Advance vs. Lohakit Metal Public | AJ Advance vs. Gunkul Engineering 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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