Correlation Between Erawan and Masterkool International
Can any of the company-specific risk be diversified away by investing in both Erawan and Masterkool International 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 Masterkool International 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 Masterkool International Public, you can compare the effects of market volatilities on Erawan and Masterkool International 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 Masterkool International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Masterkool International.
Diversification Opportunities for Erawan and Masterkool International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erawan and Masterkool is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Masterkool International Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterkool International 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 Masterkool International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterkool International has no effect on the direction of Erawan i.e., Erawan and Masterkool International go up and down completely randomly.
Pair Corralation between Erawan and Masterkool International
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.0 times more return on investment than Masterkool International. However, The Erawan Group is 1.0 times less risky than Masterkool International. It trades about 0.13 of its potential returns per unit of risk. Masterkool International Public is currently generating about 0.13 per unit of risk. If you would invest 0.00 in The Erawan Group on September 3, 2024 and sell it today you would earn a total of 400.00 from holding The Erawan Group or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Masterkool International Publi
Performance |
| Timeline |
| Erawan Group |
| Masterkool International |
Erawan and Masterkool International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Masterkool International
The main advantage of trading using opposite Erawan and Masterkool International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Masterkool International 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 Masterkool International will offset losses from the drop in Masterkool International'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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