Correlation Between CPN Retail and Erawan

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

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

Diversification Opportunities for CPN Retail and Erawan

0.39

Correlation Coefficient

CPN Retail  Erawan

Weak diversification

The 3 months correlation between CPN and Erawan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CPN Retail Growth and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and CPN Retail 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 CPN Retail Growth 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 CPN Retail i.e., CPN Retail and Erawan go up and down completely randomly.

Pair Corralation between CPN Retail and Erawan

Assuming the 90 days trading horizon CPN Retail is expected to generate 1.02 times less return on investment than Erawan. But when comparing it to its historical volatility, CPN Retail Growth is 1.2 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 0.08 of returns per unit of risk over similar time horizon. If you would invest  374.00  in The Erawan Group on September 4, 2024 and sell it today you would earn a total of  36.00  from holding The Erawan Group or generate 9.63% return on investment over 90 days.

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

CPN Retail Growth  vs.  The Erawan Group

CPN Retail Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Retail Growth are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, CPN Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Erawan Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Erawan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CPN Retail and Erawan

The main advantage of trading using opposite CPN Retail and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPN Retail 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 CPN Retail Growth 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.