Correlation Between TPI Polene and Erawan
Can any of the company-specific risk be diversified away by investing in both TPI Polene 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 TPI Polene and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPI Polene Power and The Erawan Group, you can compare the effects of market volatilities on TPI Polene 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 TPI Polene with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPI Polene and Erawan.
Diversification Opportunities for TPI Polene and Erawan
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TPI and Erawan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Power and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and TPI Polene 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 TPI Polene Power 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 TPI Polene i.e., TPI Polene and Erawan go up and down completely randomly.
Pair Corralation between TPI Polene and Erawan
Assuming the 90 days trading horizon TPI Polene Power is expected to generate 0.38 times more return on investment than Erawan. However, TPI Polene Power is 2.66 times less risky than Erawan. It trades about -0.09 of its potential returns per unit of risk. The Erawan Group is currently generating about -0.04 per unit of risk. If you would invest 304.00 in TPI Polene Power on September 4, 2024 and sell it today you would lose (4.00) from holding TPI Polene Power or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPI Polene Power vs. The Erawan Group
Performance |
| Timeline |
| TPI Polene Power |
| Erawan Group |
TPI Polene and Erawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPI Polene and Erawan
The main advantage of trading using opposite TPI Polene and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPI Polene 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.| TPI Polene vs. Bangchak Public | TPI Polene vs. Gulf Energy Development | TPI Polene vs. Bangkok Expressway and | TPI Polene vs. BGrimm Power 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 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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