Correlation Between Erawan and ONE Enterprise
Can any of the company-specific risk be diversified away by investing in both Erawan and ONE Enterprise 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 ONE Enterprise 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 The ONE Enterprise, you can compare the effects of market volatilities on Erawan and ONE Enterprise 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 ONE Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and ONE Enterprise.
Diversification Opportunities for Erawan and ONE Enterprise
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erawan and ONE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and The ONE Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONE Enterprise 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 ONE Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONE Enterprise has no effect on the direction of Erawan i.e., Erawan and ONE Enterprise go up and down completely randomly.
Pair Corralation between Erawan and ONE Enterprise
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.56 times more return on investment than ONE Enterprise. However, Erawan is 1.56 times more volatile than The ONE Enterprise. It trades about 0.14 of its potential returns per unit of risk. The ONE Enterprise is currently generating about -0.17 per unit of risk. If you would invest 392.00 in The Erawan Group on August 24, 2024 and sell it today you would earn a total of 24.00 from holding The Erawan Group or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. The ONE Enterprise
Performance |
| Timeline |
| Erawan Group |
| ONE Enterprise |
Erawan and ONE Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and ONE Enterprise
The main advantage of trading using opposite Erawan and ONE Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, ONE Enterprise 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 ONE Enterprise will offset losses from the drop in ONE Enterprise's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| ONE Enterprise vs. Major Cineplex Group | ONE Enterprise vs. Yggdrazil Group Public | ONE Enterprise vs. More Return 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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