Correlation Between Erawan and Nova Organic
Can any of the company-specific risk be diversified away by investing in both Erawan and Nova Organic 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 Nova Organic 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 Nova Organic PCL, you can compare the effects of market volatilities on Erawan and Nova Organic 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 Nova Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Nova Organic.
Diversification Opportunities for Erawan and Nova Organic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erawan and Nova is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Nova Organic PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Organic 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 Nova Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Organic PCL has no effect on the direction of Erawan i.e., Erawan and Nova Organic go up and down completely randomly.
Pair Corralation between Erawan and Nova Organic
Assuming the 90 days trading horizon The Erawan Group is expected to generate 13.47 times more return on investment than Nova Organic. However, Erawan is 13.47 times more volatile than Nova Organic PCL. It trades about 0.04 of its potential returns per unit of risk. Nova Organic PCL is currently generating about -0.08 per unit of risk. If you would invest 493.00 in The Erawan Group on November 21, 2024 and sell it today you would lose (157.00) from holding The Erawan Group or give up 31.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Nova Organic PCL
Performance |
| Timeline |
| Erawan Group |
| Nova Organic PCL |
Erawan and Nova Organic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Nova Organic
The main advantage of trading using opposite Erawan and Nova Organic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Nova Organic 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 Nova Organic will offset losses from the drop in Nova Organic's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Nova Organic vs. North East Rubbers | Nova Organic vs. RB Food Supply | Nova Organic vs. Osotspa Public | Nova Organic vs. The ONE Enterprise |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |