Correlation Between Erawan and Thai Film
Can any of the company-specific risk be diversified away by investing in both Erawan and Thai Film 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 Film 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 Film Industries, you can compare the effects of market volatilities on Erawan and Thai Film 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 Film. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Thai Film.
Diversification Opportunities for Erawan and Thai Film
Modest diversification
The 3 months correlation between Erawan and Thai is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Thai Film Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Film Industries 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 Film. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Film Industries has no effect on the direction of Erawan i.e., Erawan and Thai Film go up and down completely randomly.
Pair Corralation between Erawan and Thai Film
Assuming the 90 days trading horizon Erawan is expected to generate 1.04 times less return on investment than Thai Film. But when comparing it to its historical volatility, The Erawan Group is 1.01 times less risky than Thai Film. It trades about 0.04 of its potential returns per unit of risk. Thai Film Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Thai Film Industries on September 13, 2024 and sell it today you would lose (8.00) from holding Thai Film Industries or give up 53.33% of portfolio value 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 Film Industries
Performance |
| Timeline |
| Erawan Group |
| Thai Film Industries |
Erawan and Thai Film Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Thai Film
The main advantage of trading using opposite Erawan and Thai Film positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Thai Film 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 Film will offset losses from the drop in Thai Film's long position.| Erawan vs. Hwa Fong Rubber | Erawan vs. AAPICO Hitech Public | Erawan vs. Haad Thip Public | Erawan vs. Italian Thai Development Public |
| Thai Film vs. Thantawan Industry Public | Thai Film vs. The Erawan Group | Thai Film vs. Jay Mart Public | Thai Film 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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