Correlation Between Erawan and TMC Industrial
Can any of the company-specific risk be diversified away by investing in both Erawan and TMC Industrial 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 TMC Industrial 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 TMC Industrial Public, you can compare the effects of market volatilities on Erawan and TMC Industrial 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 TMC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and TMC Industrial.
Diversification Opportunities for Erawan and TMC Industrial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erawan and TMC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and TMC Industrial Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC Industrial 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 TMC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC Industrial Public has no effect on the direction of Erawan i.e., Erawan and TMC Industrial go up and down completely randomly.
Pair Corralation between Erawan and TMC Industrial
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.87 times more return on investment than TMC Industrial. However, The Erawan Group is 1.15 times less risky than TMC Industrial. It trades about -0.13 of its potential returns per unit of risk. TMC Industrial Public is currently generating about -0.25 per unit of risk. If you would invest 400.00 in The Erawan Group on November 27, 2024 and sell it today you would lose (68.00) from holding The Erawan Group or give up 17.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. TMC Industrial Public
Performance |
| Timeline |
| Erawan Group |
| TMC Industrial Public |
Erawan and TMC Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and TMC Industrial
The main advantage of trading using opposite Erawan and TMC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, TMC Industrial 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 TMC Industrial will offset losses from the drop in TMC Industrial's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| TMC Industrial vs. Thaicom Public | TMC Industrial vs. Home Pottery Public | TMC Industrial vs. TAC Consumer Public | TMC Industrial vs. Thanapiriya Public |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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