Correlation Between Erawan and WICE Logistics
Can any of the company-specific risk be diversified away by investing in both Erawan and WICE Logistics 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 WICE Logistics 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 WICE Logistics PCL, you can compare the effects of market volatilities on Erawan and WICE Logistics 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 WICE Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and WICE Logistics.
Diversification Opportunities for Erawan and WICE Logistics
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Erawan and WICE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and WICE Logistics PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WICE Logistics PCL 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 WICE Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WICE Logistics PCL has no effect on the direction of Erawan i.e., Erawan and WICE Logistics go up and down completely randomly.
Pair Corralation between Erawan and WICE Logistics
Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.86 times more return on investment than WICE Logistics. However, The Erawan Group is 1.16 times less risky than WICE Logistics. It trades about 0.13 of its potential returns per unit of risk. WICE Logistics PCL is currently generating about -0.34 per unit of risk. If you would invest 382.00 in The Erawan Group on August 29, 2024 and sell it today you would earn a total of 22.00 from holding The Erawan Group or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Erawan Group vs. WICE Logistics PCL
Performance |
| Timeline |
| Erawan Group |
| WICE Logistics PCL |
Erawan and WICE Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and WICE Logistics
The main advantage of trading using opposite Erawan and WICE Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, WICE Logistics 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 WICE Logistics will offset losses from the drop in WICE Logistics' long position.| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
| WICE Logistics vs. Chularat Hospital Public | WICE Logistics vs. Triple i Logistics | WICE Logistics vs. VGI Public | WICE Logistics vs. Thai Union Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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