Correlation Between Erawan and Alpha Divisions
Can any of the company-specific risk be diversified away by investing in both Erawan and Alpha Divisions 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 Alpha Divisions 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 Alpha Divisions PCL, you can compare the effects of market volatilities on Erawan and Alpha Divisions 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 Alpha Divisions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Alpha Divisions.
Diversification Opportunities for Erawan and Alpha Divisions
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erawan and Alpha is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Alpha Divisions PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Divisions PCL 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 Alpha Divisions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Divisions PCL has no effect on the direction of Erawan i.e., Erawan and Alpha Divisions go up and down completely randomly.
Pair Corralation between Erawan and Alpha Divisions
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.0 times more return on investment than Alpha Divisions. However, The Erawan Group is 1.0 times less risky than Alpha Divisions. It trades about 0.04 of its potential returns per unit of risk. Alpha Divisions PCL is currently generating about 0.04 per unit of risk. If you would invest 432.00 in The Erawan Group on September 12, 2024 and sell it today you would lose (26.00) from holding The Erawan Group or give up 6.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Alpha Divisions PCL
Performance |
| Timeline |
| Erawan Group |
| Alpha Divisions PCL |
Erawan and Alpha Divisions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Alpha Divisions
The main advantage of trading using opposite Erawan and Alpha Divisions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Alpha Divisions 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 Alpha Divisions will offset losses from the drop in Alpha Divisions' long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Alpha Divisions vs. Property Perfect Public | Alpha Divisions vs. The Erawan Group | Alpha Divisions vs. Jay Mart Public | Alpha Divisions vs. Airports of Thailand |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |