Correlation Between Erawan and Asphere Innovations

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

Diversification Opportunities for Erawan and Asphere Innovations

0.57

Correlation Coefficient

Erawan  Asphere Innovations

Very weak diversification

The 3 months correlation between Erawan and Asphere is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Asphere Innovations Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asphere Innovations 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 Asphere Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asphere Innovations has no effect on the direction of Erawan i.e., Erawan and Asphere Innovations go up and down completely randomly.

Pair Corralation between Erawan and Asphere Innovations

Assuming the 90 days trading horizon Erawan is expected to generate 1.43 times less return on investment than Asphere Innovations. But when comparing it to its historical volatility, The Erawan Group is 2.11 times less risky than Asphere Innovations. It trades about 0.03 of its potential returns per unit of risk. Asphere Innovations Public is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  392.00  in Asphere Innovations Public on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Asphere Innovations Public or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

The Erawan Group  vs.  Asphere Innovations Public

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.

Asphere Innovations

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asphere Innovations Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Asphere Innovations 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 Erawan and Asphere Innovations

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

The idea behind The Erawan Group and Asphere Innovations 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.