Correlation Between Erawan and TMT Steel
Can any of the company-specific risk be diversified away by investing in both Erawan and TMT Steel 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 TMT Steel 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 TMT Steel Public, you can compare the effects of market volatilities on Erawan and TMT Steel 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 TMT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and TMT Steel.
Diversification Opportunities for Erawan and TMT Steel
Very poor diversification
The 3 months correlation between Erawan and TMT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel 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 TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of Erawan i.e., Erawan and TMT Steel go up and down completely randomly.
Pair Corralation between Erawan and TMT Steel
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.97 times more return on investment than TMT Steel. However, Erawan is 1.97 times more volatile than TMT Steel Public. It trades about 0.16 of its potential returns per unit of risk. TMT Steel Public is currently generating about -0.91 per unit of risk. If you would invest 382.00 in The Erawan Group on August 28, 2024 and sell it today you would earn a total of 26.00 from holding The Erawan Group or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. TMT Steel Public
Performance |
| Timeline |
| Erawan Group |
| TMT Steel Public |
Erawan and TMT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and TMT Steel
The main advantage of trading using opposite Erawan and TMT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, TMT Steel 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 TMT Steel will offset losses from the drop in TMT Steel's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| TMT Steel vs. PTT Public | TMT Steel vs. PTT Exploration and | TMT Steel vs. CP ALL Public | TMT Steel vs. Kasikornbank 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |