Correlation Between Erawan and Krung Thai
Can any of the company-specific risk be diversified away by investing in both Erawan and Krung Thai 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 Krung Thai 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 Krung Thai Bank, you can compare the effects of market volatilities on Erawan and Krung Thai 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 Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Krung Thai.
Diversification Opportunities for Erawan and Krung Thai
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erawan and Krung is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank 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 Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of Erawan i.e., Erawan and Krung Thai go up and down completely randomly.
Pair Corralation between Erawan and Krung Thai
Assuming the 90 days trading horizon The Erawan Group is expected to generate 108.68 times more return on investment than Krung Thai. However, Erawan is 108.68 times more volatile than Krung Thai Bank. It trades about 0.11 of its potential returns per unit of risk. Krung Thai Bank is currently generating about 0.12 per unit of risk. If you would invest 378.00 in The Erawan Group on August 29, 2024 and sell it today you would earn a total of 26.00 from holding The Erawan Group or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Krung Thai Bank
Performance |
| Timeline |
| Erawan Group |
| Krung Thai Bank |
Erawan and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Krung Thai
The main advantage of trading using opposite Erawan and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Krung Thai 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 Krung Thai will offset losses from the drop in Krung Thai's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Krung Thai vs. The Siam Commercial | Krung Thai vs. Thai Oil Public | Krung Thai vs. Kasikornbank Public | Krung Thai vs. The Siam Cement |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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