Correlation Between Erawan and Filter Vision

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

Diversification Opportunities for Erawan and Filter Vision

0.35

Correlation Coefficient

Erawan  Filter Vision

Weak diversification

The 3 months correlation between Erawan and Filter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Filter Vision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filter Vision 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 Filter Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filter Vision Public has no effect on the direction of Erawan i.e., Erawan and Filter Vision go up and down completely randomly.

Pair Corralation between Erawan and Filter Vision

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Filter Vision. But the stock apears to be less risky and, when comparing its historical volatility, The Erawan Group is 1.24 times less risky than Filter Vision. The stock trades about -0.17 of its potential returns per unit of risk. The Filter Vision Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Filter Vision Public on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Filter Vision Public or generate 4.55% return on investment over 90 days.

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

The Erawan Group  vs.  Filter Vision 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.

Filter Vision Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Filter Vision Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Filter Vision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Erawan and Filter Vision

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

The idea behind The Erawan Group and Filter Vision 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.