Correlation Between Erawan and City Sports
Can any of the company-specific risk be diversified away by investing in both Erawan and City Sports 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 City Sports 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 City Sports and, you can compare the effects of market volatilities on Erawan and City Sports 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 City Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and City Sports.
Diversification Opportunities for Erawan and City Sports
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and City is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and City Sports and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Sports 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 City Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Sports has no effect on the direction of Erawan i.e., Erawan and City Sports go up and down completely randomly.
Pair Corralation between Erawan and City Sports
Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the City Sports. In addition to that, Erawan is 10.72 times more volatile than City Sports and. It trades about -0.17 of its total potential returns per unit of risk. City Sports and is currently generating about -0.16 per unit of volatility. If you would invest 8,675 in City Sports and on December 24, 2024 and sell it today you would lose (75.00) from holding City Sports and or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. City Sports and
Performance |
| Timeline |
| Erawan Group |
| City Sports |
Erawan and City Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and City Sports
The main advantage of trading using opposite Erawan and City Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, City Sports 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 City Sports will offset losses from the drop in City Sports' long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| City Sports vs. Chiangmai Frozen Foods | City Sports vs. Dynasty Ceramic Public | City Sports vs. Castle Peak Holdings | City Sports vs. CPL Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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