Correlation Between Erawan and Indorama Ventures
Can any of the company-specific risk be diversified away by investing in both Erawan and Indorama Ventures 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 Indorama Ventures 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 Indorama Ventures PCL, you can compare the effects of market volatilities on Erawan and Indorama Ventures 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 Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Indorama Ventures.
Diversification Opportunities for Erawan and Indorama Ventures
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erawan and Indorama is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL 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 Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of Erawan i.e., Erawan and Indorama Ventures go up and down completely randomly.
Pair Corralation between Erawan and Indorama Ventures
Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Indorama Ventures. In addition to that, Erawan is 1.02 times more volatile than Indorama Ventures PCL. It trades about -0.34 of its total potential returns per unit of risk. Indorama Ventures PCL is currently generating about 0.12 per unit of volatility. If you would invest 2,533 in Indorama Ventures PCL on September 19, 2024 and sell it today you would earn a total of 92.00 from holding Indorama Ventures PCL or generate 3.63% 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. Indorama Ventures PCL
Performance |
| Timeline |
| Erawan Group |
| Indorama Ventures PCL |
Erawan and Indorama Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Indorama Ventures
The main advantage of trading using opposite Erawan and Indorama Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Indorama Ventures 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 Indorama Ventures will offset losses from the drop in Indorama Ventures' long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Indorama Ventures vs. Thantawan Industry Public | Indorama Ventures vs. The Erawan Group | Indorama Ventures vs. Jay Mart Public | Indorama Ventures vs. Airports of Thailand |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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