Correlation Between Erawan and BTS Group
Can any of the company-specific risk be diversified away by investing in both Erawan and BTS Group 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 BTS Group 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 BTS Group Holdings, you can compare the effects of market volatilities on Erawan and BTS Group 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 BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and BTS Group.
Diversification Opportunities for Erawan and BTS Group
Average diversification
The 3 months correlation between Erawan and BTS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings 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 BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of Erawan i.e., Erawan and BTS Group go up and down completely randomly.
Pair Corralation between Erawan and BTS Group
Assuming the 90 days trading horizon The Erawan Group is expected to generate 22.51 times more return on investment than BTS Group. However, Erawan is 22.51 times more volatile than BTS Group Holdings. It trades about 0.04 of its potential returns per unit of risk. BTS Group Holdings is currently generating about -0.03 per unit of risk. If you would invest 439.00 in The Erawan Group on August 30, 2024 and sell it today you would lose (39.00) from holding The Erawan Group or give up 8.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. BTS Group Holdings
Performance |
| Timeline |
| Erawan Group |
| BTS Group Holdings |
Erawan and BTS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and BTS Group
The main advantage of trading using opposite Erawan and BTS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, BTS Group 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 BTS Group will offset losses from the drop in BTS Group's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| BTS Group vs. Bangkok Expressway and | BTS Group vs. CP ALL Public | BTS Group vs. Airports of Thailand | BTS Group vs. Bangkok Dusit Medical |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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