Correlation Between Erawan and BEC World
Can any of the company-specific risk be diversified away by investing in both Erawan and BEC World 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 BEC World 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 BEC World Public, you can compare the effects of market volatilities on Erawan and BEC World 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 BEC World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and BEC World.
Diversification Opportunities for Erawan and BEC World
Almost no diversification
The 3 months correlation between Erawan and BEC is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and BEC World Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEC World 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 BEC World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEC World Public has no effect on the direction of Erawan i.e., Erawan and BEC World go up and down completely randomly.
Pair Corralation between Erawan and BEC World
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.41 times more return on investment than BEC World. However, Erawan is 1.41 times more volatile than BEC World Public. It trades about 0.11 of its potential returns per unit of risk. BEC World Public is currently generating about -0.19 per unit of risk. If you would invest 382.00 in The Erawan Group on August 30, 2024 and sell it today you would earn a total of 18.00 from holding The Erawan Group or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. BEC World Public
Performance |
| Timeline |
| Erawan Group |
| BEC World Public |
Erawan and BEC World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and BEC World
The main advantage of trading using opposite Erawan and BEC World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, BEC World 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 BEC World will offset losses from the drop in BEC World's long position.| Erawan vs. CP ALL Public | Erawan vs. Bangkok Dusit Medical | Erawan vs. Central Pattana Public | Erawan vs. Advanced Info Service |
| BEC World vs. Land and Houses | BEC World vs. AP Public | BEC World vs. Bangkok Bank Public | BEC World vs. Charoen Pokphand Foods |
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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