Correlation Between Erawan and MFC Nichada
Can any of the company-specific risk be diversified away by investing in both Erawan and MFC Nichada 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 MFC Nichada 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 MFC Nichada Thani Property, you can compare the effects of market volatilities on Erawan and MFC Nichada 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 MFC Nichada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and MFC Nichada.
Diversification Opportunities for Erawan and MFC Nichada
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Erawan and MFC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and MFC Nichada Thani Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Nichada Thani 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 MFC Nichada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Nichada Thani has no effect on the direction of Erawan i.e., Erawan and MFC Nichada go up and down completely randomly.
Pair Corralation between Erawan and MFC Nichada
Assuming the 90 days trading horizon Erawan is expected to generate 44.92 times less return on investment than MFC Nichada. But when comparing it to its historical volatility, The Erawan Group is 6.46 times less risky than MFC Nichada. It trades about 0.04 of its potential returns per unit of risk. MFC Nichada Thani Property is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 492.00 in MFC Nichada Thani Property on September 12, 2024 and sell it today you would lose (18.00) from holding MFC Nichada Thani Property or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.18% |
| Values | Daily Returns |
The Erawan Group vs. MFC Nichada Thani Property
Performance |
| Timeline |
| Erawan Group |
| MFC Nichada Thani |
Erawan and MFC Nichada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and MFC Nichada
The main advantage of trading using opposite Erawan and MFC Nichada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, MFC Nichada 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 MFC Nichada will offset losses from the drop in MFC Nichada's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| MFC Nichada vs. Siri Prime Office | MFC Nichada vs. Quality Houses Property | MFC Nichada vs. The Erawan Group | MFC Nichada vs. Jay Mart 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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