Correlation Between Erawan and AIRA Capital
Can any of the company-specific risk be diversified away by investing in both Erawan and AIRA Capital 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 AIRA Capital 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 AIRA Capital Public, you can compare the effects of market volatilities on Erawan and AIRA Capital 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 AIRA Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and AIRA Capital.
Diversification Opportunities for Erawan and AIRA Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erawan and AIRA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and AIRA Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRA Capital 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 AIRA Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRA Capital Public has no effect on the direction of Erawan i.e., Erawan and AIRA Capital go up and down completely randomly.
Pair Corralation between Erawan and AIRA Capital
Assuming the 90 days trading horizon The Erawan Group is expected to generate 1.0 times more return on investment than AIRA Capital. However, The Erawan Group is 1.0 times less risky than AIRA Capital. It trades about 0.04 of its potential returns per unit of risk. AIRA Capital Public is currently generating about 0.04 per unit of risk. If you would invest 443.00 in The Erawan Group on September 26, 2024 and sell it today you would lose (83.00) from holding The Erawan Group or give up 18.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Erawan Group vs. AIRA Capital Public
Performance |
Timeline |
Erawan Group |
AIRA Capital Public |
Erawan and AIRA Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erawan and AIRA Capital
The main advantage of trading using opposite Erawan and AIRA Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, AIRA Capital 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 AIRA Capital will offset losses from the drop in AIRA Capital's long position.Erawan vs. CP ALL Public | Erawan vs. Bangkok Dusit Medical | Erawan vs. Airports of Thailand | Erawan vs. Kasikornbank Public |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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