Correlation Between Erawan and Impact Growth
Can any of the company-specific risk be diversified away by investing in both Erawan and Impact Growth 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 Impact Growth 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 Impact Growth REIT, you can compare the effects of market volatilities on Erawan and Impact Growth 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 Impact Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Impact Growth.
Diversification Opportunities for Erawan and Impact Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Erawan and Impact is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Impact Growth REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Growth REIT 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 Impact Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Growth REIT has no effect on the direction of Erawan i.e., Erawan and Impact Growth go up and down completely randomly.
Pair Corralation between Erawan and Impact Growth
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.49 times more return on investment than Impact Growth. However, Erawan is 1.49 times more volatile than Impact Growth REIT. It trades about 0.11 of its potential returns per unit of risk. Impact Growth REIT is currently generating about -0.13 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 18.00 from holding The Erawan Group or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Impact Growth REIT
Performance |
| Timeline |
| Erawan Group |
| Impact Growth REIT |
Erawan and Impact Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Impact Growth
The main advantage of trading using opposite Erawan and Impact Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Impact Growth 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 Impact Growth will offset losses from the drop in Impact Growth's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Impact Growth vs. CPN Retail Growth | Impact Growth vs. WHA Premium Growth | Impact Growth vs. Golden Ventures Leasehold | Impact Growth vs. LH Shopping Centers |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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