Correlation Between Erawan and Bangkok Aviation
Can any of the company-specific risk be diversified away by investing in both Erawan and Bangkok Aviation 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 Bangkok Aviation 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 Bangkok Aviation Fuel, you can compare the effects of market volatilities on Erawan and Bangkok Aviation 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 Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Bangkok Aviation.
Diversification Opportunities for Erawan and Bangkok Aviation
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and Bangkok is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel 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 Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of Erawan i.e., Erawan and Bangkok Aviation go up and down completely randomly.
Pair Corralation between Erawan and Bangkok Aviation
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.9 times more return on investment than Bangkok Aviation. However, The Erawan Group is 1.11 times less risky than Bangkok Aviation. It trades about 0.01 of its potential returns per unit of risk. Bangkok Aviation Fuel is currently generating about -0.31 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Bangkok Aviation Fuel
Performance |
| Timeline |
| Erawan Group |
| Bangkok Aviation Fuel |
Erawan and Bangkok Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Bangkok Aviation
The main advantage of trading using opposite Erawan and Bangkok Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Bangkok Aviation 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 Bangkok Aviation will offset losses from the drop in Bangkok Aviation'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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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