Correlation Between Erawan and Regional Container
Can any of the company-specific risk be diversified away by investing in both Erawan and Regional Container 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 Regional Container 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 Regional Container Lines, you can compare the effects of market volatilities on Erawan and Regional Container 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 Regional Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Regional Container.
Diversification Opportunities for Erawan and Regional Container
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and Regional is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Regional Container Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Container Lines 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 Regional Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Container Lines has no effect on the direction of Erawan i.e., Erawan and Regional Container go up and down completely randomly.
Pair Corralation between Erawan and Regional Container
Assuming the 90 days trading horizon The Erawan Group is expected to generate 17.97 times more return on investment than Regional Container. However, Erawan is 17.97 times more volatile than Regional Container Lines. It trades about 0.05 of its potential returns per unit of risk. Regional Container Lines is currently generating about 0.03 per unit of risk. If you would invest 461.00 in The Erawan Group on August 28, 2024 and sell it today you would lose (53.00) from holding The Erawan Group or give up 11.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Regional Container Lines
Performance |
| Timeline |
| Erawan Group |
| Regional Container Lines |
Erawan and Regional Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Regional Container
The main advantage of trading using opposite Erawan and Regional Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Regional Container 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 Regional Container will offset losses from the drop in Regional Container's long position.| Erawan vs. SCB X Public | Erawan vs. Kasikornbank Public | Erawan vs. PTT Public | Erawan vs. Kasikornbank Public |
| Regional Container vs. Tata Steel Public | Regional Container vs. Thaifoods Group Public | Regional Container vs. TMT Steel Public | Regional Container vs. The Erawan Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |