Correlation Between Erawan and Ichitan Group
Can any of the company-specific risk be diversified away by investing in both Erawan and Ichitan Group 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 Ichitan Group 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 Ichitan Group Public, you can compare the effects of market volatilities on Erawan and Ichitan Group 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 Ichitan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Ichitan Group.
Diversification Opportunities for Erawan and Ichitan Group
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erawan and Ichitan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Ichitan Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichitan Group 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 Ichitan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichitan Group Public has no effect on the direction of Erawan i.e., Erawan and Ichitan Group go up and down completely randomly.
Pair Corralation between Erawan and Ichitan Group
Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Ichitan Group. In addition to that, Erawan is 1.35 times more volatile than Ichitan Group Public. It trades about -0.34 of its total potential returns per unit of risk. Ichitan Group Public is currently generating about -0.1 per unit of volatility. If you would invest 1,480 in Ichitan Group Public on September 19, 2024 and sell it today you would lose (40.00) from holding Ichitan Group Public or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Ichitan Group Public
Performance |
| Timeline |
| Erawan Group |
| Ichitan Group Public |
Erawan and Ichitan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Ichitan Group
The main advantage of trading using opposite Erawan and Ichitan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Ichitan Group 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 Ichitan Group will offset losses from the drop in Ichitan Group's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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