Correlation Between Erawan and PINTHONG INDUSTRIAL

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

Diversification Opportunities for Erawan and PINTHONG INDUSTRIAL

-0.21

Correlation Coefficient

Erawan  PINTHONG INDUSTRIAL

Very good diversification

The 3 months correlation between Erawan and PINTHONG is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and PINTHONG INDUSTRIAL PARK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PINTHONG INDUSTRIAL PARK 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 PINTHONG INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PINTHONG INDUSTRIAL PARK has no effect on the direction of Erawan i.e., Erawan and PINTHONG INDUSTRIAL go up and down completely randomly.

Pair Corralation between Erawan and PINTHONG INDUSTRIAL

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the PINTHONG INDUSTRIAL. In addition to that, Erawan is 1.08 times more volatile than PINTHONG INDUSTRIAL PARK. It trades about -0.16 of its total potential returns per unit of risk. PINTHONG INDUSTRIAL PARK is currently generating about 0.02 per unit of volatility. If you would invest  630.00  in PINTHONG INDUSTRIAL PARK on December 2, 2024 and sell it today you would earn a total of  5.00  from holding PINTHONG INDUSTRIAL PARK or generate 0.79% return on investment over 90 days.

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

The Erawan Group  vs.  PINTHONG INDUSTRIAL PARK

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.

PINTHONG INDUSTRIAL PARK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PINTHONG INDUSTRIAL PARK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, PINTHONG INDUSTRIAL 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 PINTHONG INDUSTRIAL

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

The idea behind The Erawan Group and PINTHONG INDUSTRIAL PARK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.