Correlation Between Erawan and GULF ENERGY
Can any of the company-specific risk be diversified away by investing in both Erawan and GULF ENERGY 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 GULF ENERGY 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 GULF ENERGY DEVELOPMENT NVDR, you can compare the effects of market volatilities on Erawan and GULF ENERGY 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 GULF ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and GULF ENERGY.
Diversification Opportunities for Erawan and GULF ENERGY
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erawan and GULF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and GULF ENERGY DEVELOPMENT NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GULF ENERGY DEVELOPMENT 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 GULF ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GULF ENERGY DEVELOPMENT has no effect on the direction of Erawan i.e., Erawan and GULF ENERGY go up and down completely randomly.
Pair Corralation between Erawan and GULF ENERGY
Assuming the 90 days trading horizon The Erawan Group is expected to generate 32.83 times more return on investment than GULF ENERGY. However, Erawan is 32.83 times more volatile than GULF ENERGY DEVELOPMENT NVDR. It trades about 0.08 of its potential returns per unit of risk. GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.08 per unit of risk. If you would invest 458.00 in The Erawan Group on September 2, 2024 and sell it today you would lose (58.00) from holding The Erawan Group or give up 12.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. GULF ENERGY DEVELOPMENT NVDR
Performance |
| Timeline |
| Erawan Group |
| GULF ENERGY DEVELOPMENT |
Erawan and GULF ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and GULF ENERGY
The main advantage of trading using opposite Erawan and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, GULF ENERGY 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 GULF ENERGY will offset losses from the drop in GULF ENERGY's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| GULF ENERGY vs. Thai Oil Public | GULF ENERGY vs. Electricity Generating Public | GULF ENERGY vs. Ratch 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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