Correlation Between Erawan and Aikchol Hospital

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

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

Diversification Opportunities for Erawan and Aikchol Hospital

0.67

Correlation Coefficient

Erawan  Aikchol Hospital

Poor diversification

The 3 months correlation between Erawan and Aikchol is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Aikchol Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aikchol Hospital Public and Erawan 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 The Erawan Group are associated (or correlated) with Aikchol Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aikchol Hospital Public has no effect on the direction of Erawan i.e., Erawan and Aikchol Hospital go up and down completely randomly.

Pair Corralation between Erawan and Aikchol Hospital

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Aikchol Hospital. But the stock apears to be less risky and, when comparing its historical volatility, The Erawan Group is 1.37 times less risky than Aikchol Hospital. The stock trades about -0.18 of its potential returns per unit of risk. The Aikchol Hospital Public is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,530  in Aikchol Hospital Public on December 27, 2024 and sell it today you would lose (150.00) from holding Aikchol Hospital Public or give up 9.8% of portfolio value over 90 days.

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

The Erawan Group  vs.  Aikchol Hospital Public

Erawan Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Erawan Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aikchol Hospital Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aikchol Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Erawan and Aikchol Hospital

The main advantage of trading using opposite Erawan and Aikchol Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Aikchol Hospital 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 Aikchol Hospital will offset losses from the drop in Aikchol Hospital's long position.

The idea behind The Erawan Group and Aikchol Hospital Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.