Correlation Between Erawan and RS Public

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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

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Erawan and RS Public is 0.87. 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 The Erawan Group is expected to generate 0.19 times more return on investment than RS Public. However, The Erawan Group is 5.23 times less risky than RS Public. It trades about -0.19 of its potential returns per unit of risk. RS Public is currently generating about -0.53 per unit of risk. If you would invest  374.00  in The Erawan Group on November 2, 2024 and sell it today you would lose (34.00) from holding The Erawan Group or give up 9.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

The Erawan Group  vs.  RS Public

 Performance 
       Timeline  
Erawan Group 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days The Erawan Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
RS Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days RS Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.
The idea behind The Erawan Group and RS Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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