Correlation Between Erawan and Global Service
Can any of the company-specific risk be diversified away by investing in both Erawan and Global Service 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 Global Service 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 Global Service Center, you can compare the effects of market volatilities on Erawan and Global Service 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 Global Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Global Service.
Diversification Opportunities for Erawan and Global Service
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Erawan and Global is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Global Service Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Service Center 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 Global Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Service Center has no effect on the direction of Erawan i.e., Erawan and Global Service go up and down completely randomly.
Pair Corralation between Erawan and Global Service
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.25 times more return on investment than Global Service. However, The Erawan Group is 4.02 times less risky than Global Service. It trades about 0.16 of its potential returns per unit of risk. Global Service Center is currently generating about 0.02 per unit of risk. If you would invest 382.00 in The Erawan Group on August 27, 2024 and sell it today you would earn a total of 26.00 from holding The Erawan Group or generate 6.81% 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. Global Service Center
Performance |
| Timeline |
| Erawan Group |
| Global Service Center |
Erawan and Global Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Global Service
The main advantage of trading using opposite Erawan and Global Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Global Service 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 Global Service will offset losses from the drop in Global Service's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Global Service vs. Com7 PCL | Global Service vs. TKS Technologies Public | Global Service vs. Rajthanee Hospital Public | Global Service 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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