Correlation Between Erawan and Amata Summit

Can any of the company-specific risk be diversified away by investing in both Erawan and Amata Summit 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 Amata Summit 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 Amata Summit Growth, you can compare the effects of market volatilities on Erawan and Amata Summit 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 Amata Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Amata Summit.

Diversification Opportunities for Erawan and Amata Summit

-0.05

Correlation Coefficient

Erawan  Amata Summit

Good diversification

The 3 months correlation between Erawan and Amata is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Amata Summit Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata Summit Growth 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 Amata Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Summit Growth has no effect on the direction of Erawan i.e., Erawan and Amata Summit go up and down completely randomly.

Pair Corralation between Erawan and Amata Summit

Assuming the 90 days trading horizon The Erawan Group is expected to generate 72.21 times more return on investment than Amata Summit. However, Erawan is 72.21 times more volatile than Amata Summit Growth. It trades about 0.05 of its potential returns per unit of risk. Amata Summit Growth is currently generating about 0.06 per unit of risk. If you would invest  512.00  in The Erawan Group on October 6, 2024 and sell it today you would lose (142.00) from holding The Erawan Group or give up 27.73% of portfolio value over 90 days.

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

The Erawan Group  vs.  Amata Summit Growth

Erawan Group

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amata Summit Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amata Summit Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Amata Summit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Erawan and Amata Summit

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

The idea behind The Erawan Group and Amata Summit Growth 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.