Correlation Between Erawan and QTC Energy
Can any of the company-specific risk be diversified away by investing in both Erawan and QTC Energy 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 QTC Energy 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 QTC Energy Public, you can compare the effects of market volatilities on Erawan and QTC Energy 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 QTC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and QTC Energy.
Diversification Opportunities for Erawan and QTC Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Erawan and QTC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and QTC Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QTC Energy Public 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 QTC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QTC Energy Public has no effect on the direction of Erawan i.e., Erawan and QTC Energy go up and down completely randomly.
Pair Corralation between Erawan and QTC Energy
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.65 times more return on investment than QTC Energy. However, Erawan is 1.65 times more volatile than QTC Energy Public. It trades about 0.13 of its potential returns per unit of risk. QTC Energy Public is currently generating about 0.04 per unit of risk. If you would invest 382.00 in The Erawan Group on August 29, 2024 and sell it today you would earn a total of 22.00 from holding The Erawan Group or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. QTC Energy Public
Performance |
| Timeline |
| Erawan Group |
| QTC Energy Public |
Erawan and QTC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and QTC Energy
The main advantage of trading using opposite Erawan and QTC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, QTC Energy 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 QTC Energy will offset losses from the drop in QTC Energy's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| QTC Energy vs. Southern Concrete Pile | QTC Energy vs. Star Petroleum Refining | QTC Energy vs. Qualitech Public | QTC Energy vs. Quality Construction Products |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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