Correlation Between Erawan and Thai Coating
Can any of the company-specific risk be diversified away by investing in both Erawan and Thai Coating 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 Thai Coating 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 Thai Coating Industrial, you can compare the effects of market volatilities on Erawan and Thai Coating 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 Thai Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Thai Coating.
Diversification Opportunities for Erawan and Thai Coating
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and Thai is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Thai Coating Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Coating Industrial 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 Thai Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Coating Industrial has no effect on the direction of Erawan i.e., Erawan and Thai Coating go up and down completely randomly.
Pair Corralation between Erawan and Thai Coating
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.23 times more return on investment than Thai Coating. However, The Erawan Group is 4.26 times less risky than Thai Coating. It trades about 0.08 of its potential returns per unit of risk. Thai Coating Industrial is currently generating about 0.02 per unit of risk. If you would invest 394.00 in The Erawan Group on September 12, 2024 and sell it today you would earn a total of 12.00 from holding The Erawan Group or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Thai Coating Industrial
Performance |
| Timeline |
| Erawan Group |
| Thai Coating Industrial |
Erawan and Thai Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Thai Coating
The main advantage of trading using opposite Erawan and Thai Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Thai Coating 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 Thai Coating will offset losses from the drop in Thai Coating's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Thai Coating vs. Thantawan Industry Public | Thai Coating vs. The Erawan Group | Thai Coating vs. Jay Mart Public | Thai Coating vs. Airports of Thailand |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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