Correlation Between Erawan and Surapon Foods
Can any of the company-specific risk be diversified away by investing in both Erawan and Surapon Foods 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 Surapon Foods 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 Surapon Foods Public, you can compare the effects of market volatilities on Erawan and Surapon Foods 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 Surapon Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Surapon Foods.
Diversification Opportunities for Erawan and Surapon Foods
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Erawan and Surapon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Surapon Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surapon Foods 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 Surapon Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surapon Foods Public has no effect on the direction of Erawan i.e., Erawan and Surapon Foods go up and down completely randomly.
Pair Corralation between Erawan and Surapon Foods
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.0 times more return on investment than Surapon Foods. However, Erawan is 1.0 times more volatile than Surapon Foods Public. It trades about 0.04 of its potential returns per unit of risk. Surapon Foods Public is currently generating about 0.04 per unit of risk. If you would invest 432.00 in The Erawan Group on September 13, 2024 and sell it today you would lose (24.00) from holding The Erawan Group or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Surapon Foods Public
Performance |
| Timeline |
| Erawan Group |
| Surapon Foods Public |
Erawan and Surapon Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Surapon Foods
The main advantage of trading using opposite Erawan and Surapon Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Surapon Foods 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 Surapon Foods will offset losses from the drop in Surapon Foods' long position.| Erawan vs. Hwa Fong Rubber | Erawan vs. AAPICO Hitech Public | Erawan vs. Haad Thip Public | Erawan vs. Italian Thai Development Public |
| Surapon Foods vs. GFPT Public | Surapon Foods vs. Dynasty Ceramic Public | Surapon Foods vs. Haad Thip Public | Surapon Foods 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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