Correlation Between Erawan and Workpoint Entertainment
Can any of the company-specific risk be diversified away by investing in both Erawan and Workpoint Entertainment 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 Workpoint Entertainment 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 Workpoint Entertainment Public, you can compare the effects of market volatilities on Erawan and Workpoint Entertainment 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 Workpoint Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Workpoint Entertainment.
Diversification Opportunities for Erawan and Workpoint Entertainment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Erawan and Workpoint is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Workpoint Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workpoint Entertainment 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 Workpoint Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workpoint Entertainment has no effect on the direction of Erawan i.e., Erawan and Workpoint Entertainment go up and down completely randomly.
Pair Corralation between Erawan and Workpoint Entertainment
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.91 times more return on investment than Workpoint Entertainment. However, Erawan is 1.91 times more volatile than Workpoint Entertainment Public. It trades about -0.01 of its potential returns per unit of risk. Workpoint Entertainment Public is currently generating about -0.45 per unit of risk. If you would invest 416.00 in The Erawan Group on September 13, 2024 and sell it today you would lose (8.00) from holding The Erawan Group or give up 1.92% 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. Workpoint Entertainment Public
Performance |
| Timeline |
| Erawan Group |
| Workpoint Entertainment |
Erawan and Workpoint Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erawan and Workpoint Entertainment
The main advantage of trading using opposite Erawan and Workpoint Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Workpoint Entertainment 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 Workpoint Entertainment will offset losses from the drop in Workpoint Entertainment's long position.| Erawan vs. Hwa Fong Rubber | Erawan vs. AAPICO Hitech Public | Erawan vs. Haad Thip Public | Erawan vs. Italian Thai Development Public |
| Workpoint Entertainment vs. Synnex Public | Workpoint Entertainment vs. SVI Public | Workpoint Entertainment vs. Interlink Communication Public | Workpoint Entertainment vs. The Erawan 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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