Correlation Between Autocorp Holding and Erawan

Can any of the company-specific risk be diversified away by investing in both Autocorp Holding 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 Autocorp Holding and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autocorp Holding Public and The Erawan Group, you can compare the effects of market volatilities on Autocorp Holding 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 Autocorp Holding with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocorp Holding and Erawan.

Diversification Opportunities for Autocorp Holding and Erawan

0.34

Correlation Coefficient

Autocorp Holding  Erawan

Weak diversification

The 3 months correlation between Autocorp and Erawan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Autocorp Holding 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 Autocorp Holding 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 Autocorp Holding 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 Autocorp Holding i.e., Autocorp Holding and Erawan go up and down completely randomly.

Pair Corralation between Autocorp Holding and Erawan

Assuming the 90 days trading horizon Autocorp Holding Public is expected to generate 1.0 times more return on investment than Erawan. However, Autocorp Holding is 1.0 times more volatile than The Erawan Group. It trades about 0.12 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.11 per unit of risk. If you would invest  78.00  in Autocorp Holding Public on August 31, 2024 and sell it today you would earn a total of  13.00  from holding Autocorp Holding Public or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Autocorp Holding Public  vs.  The Erawan Group

Autocorp Holding Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autocorp Holding Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Autocorp Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Erawan Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Erawan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autocorp Holding and Erawan

The main advantage of trading using opposite Autocorp Holding and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autocorp Holding 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.

The idea behind Autocorp Holding Public and The Erawan Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.