Correlation Between Erawan and Thai Rubber
Can any of the company-specific risk be diversified away by investing in both Erawan and Thai Rubber 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 Rubber 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 Rubber Latex, you can compare the effects of market volatilities on Erawan and Thai Rubber 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 Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Thai Rubber.
Diversification Opportunities for Erawan and Thai Rubber
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Erawan and Thai is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex 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 Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of Erawan i.e., Erawan and Thai Rubber go up and down completely randomly.
Pair Corralation between Erawan and Thai Rubber
Assuming the 90 days trading horizon The Erawan Group is expected to generate 16.82 times more return on investment than Thai Rubber. However, Erawan is 16.82 times more volatile than Thai Rubber Latex. It trades about 0.05 of its potential returns per unit of risk. Thai Rubber Latex is currently generating about -0.01 per unit of risk. If you would invest 453.00 in The Erawan Group on August 29, 2024 and sell it today you would lose (53.00) from holding The Erawan Group or give up 11.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. Thai Rubber Latex
Performance |
| Timeline |
| Erawan Group |
| Thai Rubber Latex |
Erawan and Thai Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Thai Rubber
The main advantage of trading using opposite Erawan and Thai Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Thai Rubber 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 Rubber will offset losses from the drop in Thai Rubber's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| Thai Rubber vs. Thoresen Thai Agencies | Thai Rubber vs. Sri Trang Agro Industry | Thai Rubber vs. TPI Polene Public | Thai Rubber vs. Ratchthani Leasing 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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