Correlation Between Forth Smart and Erawan
Can any of the company-specific risk be diversified away by investing in both Forth Smart and Erawan 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 Forth Smart and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forth Smart Service and The Erawan Group, you can compare the effects of market volatilities on Forth Smart and Erawan 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 Forth Smart with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forth Smart and Erawan.
Diversification Opportunities for Forth Smart and Erawan
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forth and Erawan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Forth Smart Service and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and Forth Smart 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 Forth Smart Service are associated (or correlated) with Erawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erawan Group has no effect on the direction of Forth Smart i.e., Forth Smart and Erawan go up and down completely randomly.
Pair Corralation between Forth Smart and Erawan
Assuming the 90 days trading horizon Forth Smart is expected to generate 19.2 times less return on investment than Erawan. But when comparing it to its historical volatility, Forth Smart Service is 22.97 times less risky than Erawan. It trades about 0.1 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 458.00 in The Erawan Group on September 1, 2024 and sell it today you would lose (58.00) from holding The Erawan Group or give up 12.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Forth Smart Service vs. The Erawan Group
Performance |
| Timeline |
| Forth Smart Service |
| Erawan Group |
Forth Smart and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forth Smart and Erawan
The main advantage of trading using opposite Forth Smart and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forth Smart position performs unexpectedly, Erawan 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 Erawan will offset losses from the drop in Erawan's long position.| Forth Smart vs. Hana Microelectronics Public | Forth Smart vs. Ekachai Medical Care | Forth Smart vs. Megachem Public | Forth Smart vs. Diamond Building Products |
| Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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