Correlation Between Minor International and Erawan
Can any of the company-specific risk be diversified away by investing in both Minor International 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 Minor International and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minor International Public and The Erawan Group, you can compare the effects of market volatilities on Minor International 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 Minor International with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minor International and Erawan.
Diversification Opportunities for Minor International and Erawan
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Minor and Erawan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Minor International Public and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and Minor International 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 Minor International Public 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 Minor International i.e., Minor International and Erawan go up and down completely randomly.
Pair Corralation between Minor International and Erawan
Assuming the 90 days trading horizon Minor International is expected to generate 3.37 times less return on investment than Erawan. But when comparing it to its historical volatility, Minor International Public is 1.31 times less risky than Erawan. It trades about 0.06 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 382.00 in The Erawan Group on August 28, 2024 and sell it today you would earn a total of 26.00 from holding The Erawan Group or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minor International Public vs. The Erawan Group
Performance |
| Timeline |
| Minor International |
| Erawan Group |
Minor International and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minor International and Erawan
The main advantage of trading using opposite Minor International and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minor International 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.| Minor International vs. CP ALL Public | Minor International vs. Bangkok Dusit Medical | Minor International vs. Airports of Thailand | Minor International vs. Kasikornbank Public |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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