Correlation Between Sea Oil and Erawan
Can any of the company-specific risk be diversified away by investing in both Sea Oil 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 Sea Oil and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Oil Public and The Erawan Group, you can compare the effects of market volatilities on Sea Oil 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 Sea Oil with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Oil and Erawan.
Diversification Opportunities for Sea Oil and Erawan
Almost no diversification
The 3 months correlation between Sea and Erawan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sea Oil 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 Sea Oil 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 Sea Oil 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 Sea Oil i.e., Sea Oil and Erawan go up and down completely randomly.
Pair Corralation between Sea Oil and Erawan
Assuming the 90 days trading horizon Sea Oil is expected to generate 1.52 times less return on investment than Erawan. But when comparing it to its historical volatility, Sea Oil Public is 1.49 times less risky than Erawan. It trades about 0.13 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. 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 Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea Oil Public vs. The Erawan Group
Performance |
| Timeline |
| Sea Oil Public |
| Erawan Group |
Sea Oil and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea Oil and Erawan
The main advantage of trading using opposite Sea Oil and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Oil 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.| Sea Oil vs. Star Petroleum Refining | Sea Oil vs. Power Solution Technologies | Sea Oil vs. Kingsmen CMTI Public | Sea Oil vs. Project Planning Service |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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