Correlation Between Erawan and Sea Oil
Can any of the company-specific risk be diversified away by investing in both Erawan and Sea Oil 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 Sea Oil 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 Sea Oil Public, you can compare the effects of market volatilities on Erawan and Sea Oil 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 Sea Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Sea Oil.
Diversification Opportunities for Erawan and Sea Oil
Almost no diversification
The 3 months correlation between Erawan and Sea is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Sea Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Oil 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 Sea Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Oil Public has no effect on the direction of Erawan i.e., Erawan and Sea Oil go up and down completely randomly.
Pair Corralation between Erawan and Sea Oil
Assuming the 90 days trading horizon Erawan is expected to generate 1.02 times less return on investment than Sea Oil. In addition to that, Erawan is 1.0 times more volatile than Sea Oil Public. It trades about 0.06 of its total potential returns per unit of risk. Sea Oil Public is currently generating about 0.06 per unit of volatility. If you would invest 279.00 in Sea Oil Public on August 25, 2024 and sell it today you would lose (7.00) from holding Sea Oil Public or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Sea Oil Public
Performance |
| Timeline |
| Erawan Group |
| Sea Oil Public |
Erawan and Sea Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Sea Oil
The main advantage of trading using opposite Erawan and Sea Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Sea Oil 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 Sea Oil will offset losses from the drop in Sea Oil's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Sea Oil vs. Krung Thai Bank | Sea Oil vs. Thai Union Group | Sea Oil vs. PTT Public | Sea Oil vs. PTT Exploration and |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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