Correlation Between Erawan and Eastern Technical
Can any of the company-specific risk be diversified away by investing in both Erawan and Eastern Technical 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 Eastern Technical 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 Eastern Technical Engineering, you can compare the effects of market volatilities on Erawan and Eastern Technical 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 Eastern Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Eastern Technical.
Diversification Opportunities for Erawan and Eastern Technical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erawan and Eastern is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical 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 Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of Erawan i.e., Erawan and Eastern Technical go up and down completely randomly.
Pair Corralation between Erawan and Eastern Technical
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.0 times more return on investment than Eastern Technical. However, The Erawan Group is 1.0 times less risky than Eastern Technical. It trades about 0.1 of its potential returns per unit of risk. Eastern Technical Engineering is currently generating about 0.1 per unit of risk. If you would invest 0.00 in The Erawan Group on November 2, 2024 and sell it today you would earn a total of 340.00 from holding The Erawan Group or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Eastern Technical Engineering
Performance |
| Timeline |
| Erawan Group |
| Eastern Technical |
Erawan and Eastern Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Eastern Technical
The main advantage of trading using opposite Erawan and Eastern Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Eastern Technical 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 Eastern Technical will offset losses from the drop in Eastern Technical's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Eastern Technical vs. Srinanaporn Marketing Public | Eastern Technical vs. Thaifoods Group Public | Eastern Technical vs. GFPT Public | Eastern Technical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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