Correlation Between Asia Precision and Erawan

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

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

Diversification Opportunities for Asia Precision and Erawan

0.23

Correlation Coefficient

Asia Precision  Erawan

Modest diversification

The 3 months correlation between Asia and Erawan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision 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 Asia Precision 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 Asia Precision 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 Asia Precision i.e., Asia Precision and Erawan go up and down completely randomly.

Pair Corralation between Asia Precision and Erawan

Assuming the 90 days trading horizon Asia Precision Public is expected to under-perform the Erawan. In addition to that, Asia Precision is 1.46 times more volatile than The Erawan Group. It trades about -0.02 of its total potential returns per unit of risk. The Erawan Group is currently generating about 0.03 per unit of volatility. If you would invest  396.00  in The Erawan Group on September 12, 2024 and sell it today you would earn a total of  10.00  from holding The Erawan Group or generate 2.53% return on investment over 90 days.

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

Asia Precision Public  vs.  The Erawan Group

Asia Precision Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Precision Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asia Precision is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Erawan Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Erawan is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Precision and Erawan

The main advantage of trading using opposite Asia Precision and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Precision 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 Asia Precision 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.