Correlation Between Erawan and Hydrotek Public
Can any of the company-specific risk be diversified away by investing in both Erawan and Hydrotek Public 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 Hydrotek Public 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 Hydrotek Public, you can compare the effects of market volatilities on Erawan and Hydrotek Public 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 Hydrotek Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Hydrotek Public.
Diversification Opportunities for Erawan and Hydrotek Public
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Erawan and Hydrotek is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Hydrotek Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrotek Public 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 Hydrotek Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrotek Public has no effect on the direction of Erawan i.e., Erawan and Hydrotek Public go up and down completely randomly.
Pair Corralation between Erawan and Hydrotek Public
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.16 times more return on investment than Hydrotek Public. However, The Erawan Group is 6.14 times less risky than Hydrotek Public. It trades about 0.13 of its potential returns per unit of risk. Hydrotek Public is currently generating about -0.09 per unit of risk. If you would invest 382.00 in The Erawan Group on August 29, 2024 and sell it today you would earn a total of 22.00 from holding The Erawan Group or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Hydrotek Public
Performance |
| Timeline |
| Erawan Group |
| Hydrotek Public |
Erawan and Hydrotek Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Hydrotek Public
The main advantage of trading using opposite Erawan and Hydrotek Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Hydrotek Public 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 Hydrotek Public will offset losses from the drop in Hydrotek Public's long position.| Erawan vs. SCB X Public | Erawan vs. Kasikornbank Public | Erawan vs. PTT Public | Erawan vs. Kasikornbank Public |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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