Correlation Between Erawan and JD Food
Can any of the company-specific risk be diversified away by investing in both Erawan and JD Food 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 JD Food 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 JD Food PCL, you can compare the effects of market volatilities on Erawan and JD Food 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 JD Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and JD Food.
Diversification Opportunities for Erawan and JD Food
Good diversification
The 3 months correlation between Erawan and JDF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and JD Food PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Food 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 JD Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Food PCL has no effect on the direction of Erawan i.e., Erawan and JD Food go up and down completely randomly.
Pair Corralation between Erawan and JD Food
Assuming the 90 days trading horizon The Erawan Group is expected to generate 30.6 times more return on investment than JD Food. However, Erawan is 30.6 times more volatile than JD Food PCL. It trades about 0.06 of its potential returns per unit of risk. JD Food PCL is currently generating about 0.0 per unit of risk. If you would invest 517.00 in The Erawan Group on August 25, 2024 and sell it today you would lose (105.00) from holding The Erawan Group or give up 20.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. JD Food PCL
Performance |
| Timeline |
| Erawan Group |
| JD Food PCL |
Erawan and JD Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and JD Food
The main advantage of trading using opposite Erawan and JD Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, JD Food 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 JD Food will offset losses from the drop in JD Food's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| JD Food vs. Chamni Eye PCL | JD Food vs. Siam Global House | JD Food vs. The Erawan Group | JD Food vs. Ditto 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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