Correlation Between Erawan and Applicad Public
Can any of the company-specific risk be diversified away by investing in both Erawan and Applicad Public 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 Applicad Public 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 Applicad Public, you can compare the effects of market volatilities on Erawan and Applicad Public 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 Applicad Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Applicad Public.
Diversification Opportunities for Erawan and Applicad Public
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erawan and Applicad is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Applicad Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applicad Public 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 Applicad Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applicad Public has no effect on the direction of Erawan i.e., Erawan and Applicad Public go up and down completely randomly.
Pair Corralation between Erawan and Applicad Public
Assuming the 90 days trading horizon The Erawan Group is expected to generate 18.58 times more return on investment than Applicad Public. However, Erawan is 18.58 times more volatile than Applicad Public. It trades about 0.08 of its potential returns per unit of risk. Applicad Public is currently generating about 0.0 per unit of risk. If you would invest 458.00 in The Erawan Group on September 1, 2024 and sell it today you would lose (58.00) from holding The Erawan Group or give up 12.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
The Erawan Group vs. Applicad Public
Performance |
| Timeline |
| Erawan Group |
| Applicad Public |
Erawan and Applicad Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Applicad Public
The main advantage of trading using opposite Erawan and Applicad Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Applicad Public 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 Applicad Public will offset losses from the drop in Applicad Public's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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