Correlation Between Erawan and RS Public
Can any of the company-specific risk be diversified away by investing in both Erawan and RS Public 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 RS Public 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 RS Public, you can compare the effects of market volatilities on Erawan and RS Public 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 RS Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and RS Public.
Diversification Opportunities for Erawan and RS Public
Very weak diversification
The 3 months correlation between Erawan and RS-R is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and RS Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS 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 RS Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Public has no effect on the direction of Erawan i.e., Erawan and RS Public go up and down completely randomly.
Pair Corralation between Erawan and RS Public
Assuming the 90 days trading horizon Erawan is expected to generate 1.98 times less return on investment than RS Public. But when comparing it to its historical volatility, The Erawan Group is 1.41 times less risky than RS Public. It trades about 0.11 of its potential returns per unit of risk. RS Public is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 720.00 in RS Public on September 2, 2024 and sell it today you would lose (150.00) from holding RS Public or give up 20.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. RS Public
Performance |
| Timeline |
| Erawan Group |
| RS Public |
Erawan and RS Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and RS Public
The main advantage of trading using opposite Erawan and RS Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, RS Public 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 RS Public will offset losses from the drop in RS Public's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| RS Public vs. Major Cineplex Group | RS Public vs. The Erawan Group | RS Public vs. Autocorp Holding Public | RS Public vs. XSpring Capital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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