Correlation Between Erawan and Thantawan Industry
Can any of the company-specific risk be diversified away by investing in both Erawan and Thantawan Industry 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 Thantawan Industry 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 Thantawan Industry Public, you can compare the effects of market volatilities on Erawan and Thantawan Industry 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 Thantawan Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Thantawan Industry.
Diversification Opportunities for Erawan and Thantawan Industry
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erawan and Thantawan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Thantawan Industry Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thantawan Industry 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 Thantawan Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thantawan Industry Public has no effect on the direction of Erawan i.e., Erawan and Thantawan Industry go up and down completely randomly.
Pair Corralation between Erawan and Thantawan Industry
Assuming the 90 days trading horizon The Erawan Group is expected to generate 44.09 times more return on investment than Thantawan Industry. However, Erawan is 44.09 times more volatile than Thantawan Industry Public. It trades about 0.05 of its potential returns per unit of risk. Thantawan Industry Public is currently generating about 0.03 per unit of risk. If you would invest 441.00 in The Erawan Group on September 12, 2024 and sell it today you would lose (35.00) from holding The Erawan Group or give up 7.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Thantawan Industry Public
Performance |
| Timeline |
| Erawan Group |
| Thantawan Industry Public |
Erawan and Thantawan Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Thantawan Industry
The main advantage of trading using opposite Erawan and Thantawan Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Thantawan Industry 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 Thantawan Industry will offset losses from the drop in Thantawan Industry's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Thantawan Industry vs. The Erawan Group | Thantawan Industry vs. Jay Mart Public | Thantawan Industry vs. Airports of Thailand | Thantawan Industry vs. Eastern Technical Engineering |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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