Correlation Between Erawan and Capital Engineering
Can any of the company-specific risk be diversified away by investing in both Erawan and Capital Engineering 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 Capital Engineering 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 Capital Engineering Network, you can compare the effects of market volatilities on Erawan and Capital Engineering 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 Capital Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Capital Engineering.
Diversification Opportunities for Erawan and Capital Engineering
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Erawan and Capital is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Capital Engineering Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Engineering 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 Capital Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Engineering has no effect on the direction of Erawan i.e., Erawan and Capital Engineering go up and down completely randomly.
Pair Corralation between Erawan and Capital Engineering
Assuming the 90 days trading horizon The Erawan Group is expected to generate 8.31 times more return on investment than Capital Engineering. However, Erawan is 8.31 times more volatile than Capital Engineering Network. It trades about 0.14 of its potential returns per unit of risk. Capital Engineering Network is currently generating about 0.0 per unit of risk. If you would invest 388.00 in The Erawan Group on September 13, 2024 and sell it today you would earn a total of 20.00 from holding The Erawan Group or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Capital Engineering Network
Performance |
| Timeline |
| Erawan Group |
| Capital Engineering |
Erawan and Capital Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Capital Engineering
The main advantage of trading using opposite Erawan and Capital Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Capital Engineering 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 Capital Engineering will offset losses from the drop in Capital Engineering's long position.| Erawan vs. Hwa Fong Rubber | Erawan vs. AAPICO Hitech Public | Erawan vs. Haad Thip Public | Erawan vs. Italian Thai Development Public |
| Capital Engineering vs. Gratitude Infinite Public | Capital Engineering vs. Christiani Nielsen Public | Capital Engineering vs. Country Group Holdings | Capital Engineering vs. BJC Heavy Industries |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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