Correlation Between Erawan and WHA Public
Can any of the company-specific risk be diversified away by investing in both Erawan and WHA Public 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 WHA Public 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 WHA Public, you can compare the effects of market volatilities on Erawan and WHA Public 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 WHA Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and WHA Public.
Diversification Opportunities for Erawan and WHA Public
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and WHA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and WHA Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA 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 WHA Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Public has no effect on the direction of Erawan i.e., Erawan and WHA Public go up and down completely randomly.
Pair Corralation between Erawan and WHA Public
Assuming the 90 days trading horizon The Erawan Group is expected to generate 30.21 times more return on investment than WHA Public. However, Erawan is 30.21 times more volatile than WHA Public. It trades about 0.05 of its potential returns per unit of risk. WHA Public is currently generating about 0.06 per unit of risk. If you would invest 416.00 in The Erawan Group on August 27, 2024 and sell it today you would lose (4.00) from holding The Erawan Group or give up 0.96% 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. WHA Public
Performance |
| Timeline |
| Erawan Group |
| WHA Public |
Erawan and WHA Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and WHA Public
The main advantage of trading using opposite Erawan and WHA Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, WHA Public 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 WHA Public will offset losses from the drop in WHA Public's long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| WHA Public vs. Bangkok Dusit Medical | WHA Public vs. Land and Houses | WHA Public vs. BTS Group Holdings | WHA Public vs. Bangkok Expressway and |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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