Correlation Between Erawan and Communication System
Can any of the company-specific risk be diversified away by investing in both Erawan and Communication System 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 Communication System 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 Communication System Solution, you can compare the effects of market volatilities on Erawan and Communication System 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 Communication System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Communication System.
Diversification Opportunities for Erawan and Communication System
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Erawan and Communication is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Communication System Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication System 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 Communication System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication System has no effect on the direction of Erawan i.e., Erawan and Communication System go up and down completely randomly.
Pair Corralation between Erawan and Communication System
Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Communication System. But the stock apears to be less risky and, when comparing its historical volatility, The Erawan Group is 1.56 times less risky than Communication System. The stock trades about -0.05 of its potential returns per unit of risk. The Communication System Solution is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Communication System Solution on August 25, 2024 and sell it today you would earn a total of 2.00 from holding Communication System Solution or generate 2.08% 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. Communication System Solution
Performance |
| Timeline |
| Erawan Group |
| Communication System |
Erawan and Communication System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Communication System
The main advantage of trading using opposite Erawan and Communication System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Communication System 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 Communication System will offset losses from the drop in Communication System's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Communication System vs. Tata Steel Public | Communication System vs. Thaifoods Group Public | Communication System vs. TMT Steel Public | Communication System vs. The Erawan Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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