Correlation Between Erawan and Infraset Public

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

Diversification Opportunities for Erawan and Infraset Public

-0.26

Correlation Coefficient

Erawan  Infraset Public

Very good diversification

The 3 months correlation between Erawan and Infraset is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Infraset Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infraset 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 Infraset Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infraset Public has no effect on the direction of Erawan i.e., Erawan and Infraset Public go up and down completely randomly.

Pair Corralation between Erawan and Infraset Public

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Infraset Public. But the stock apears to be less risky and, when comparing its historical volatility, The Erawan Group is 2.66 times less risky than Infraset Public. The stock trades about -0.25 of its potential returns per unit of risk. The Infraset Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Infraset Public on September 18, 2024 and sell it today you would lose (4.00) from holding Infraset Public or give up 1.19% 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.  Infraset Public

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 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.

Infraset Public

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Infraset Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Infraset Public sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erawan and Infraset Public

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

The idea behind The Erawan Group and Infraset 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.