Correlation Between Erawan and Asian Sea
Can any of the company-specific risk be diversified away by investing in both Erawan and Asian Sea 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 Asian Sea 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 Asian Sea, you can compare the effects of market volatilities on Erawan and Asian Sea 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 Asian Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Asian Sea.
Diversification Opportunities for Erawan and Asian Sea
Good diversification
The 3 months correlation between Erawan and Asian is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Asian Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Sea 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 Asian Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Sea has no effect on the direction of Erawan i.e., Erawan and Asian Sea go up and down completely randomly.
Pair Corralation between Erawan and Asian Sea
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.68 times more return on investment than Asian Sea. However, Erawan is 1.68 times more volatile than Asian Sea. It trades about 0.18 of its potential returns per unit of risk. Asian Sea is currently generating about -0.25 per unit of risk. If you would invest 382.00 in The Erawan Group on August 27, 2024 and sell it today you would earn a total of 30.00 from holding The Erawan Group or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Asian Sea
Performance |
| Timeline |
| Erawan Group |
| Asian Sea |
Erawan and Asian Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Asian Sea
The main advantage of trading using opposite Erawan and Asian Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Asian Sea 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 Asian Sea will offset losses from the drop in Asian Sea's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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