Correlation Between Erawan and Premier Marketing
Can any of the company-specific risk be diversified away by investing in both Erawan and Premier Marketing 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 Premier Marketing 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 Premier Marketing Public, you can compare the effects of market volatilities on Erawan and Premier Marketing 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 Premier Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erawan and Premier Marketing.
Diversification Opportunities for Erawan and Premier Marketing
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Erawan and Premier is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Premier Marketing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Marketing 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 Premier Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Marketing Public has no effect on the direction of Erawan i.e., Erawan and Premier Marketing go up and down completely randomly.
Pair Corralation between Erawan and Premier Marketing
Assuming the 90 days trading horizon The Erawan Group is expected to generate 32.52 times more return on investment than Premier Marketing. However, Erawan is 32.52 times more volatile than Premier Marketing Public. It trades about 0.04 of its potential returns per unit of risk. Premier Marketing Public is currently generating about 0.04 per unit of risk. If you would invest 469.00 in The Erawan Group on December 3, 2024 and sell it today you would lose (163.00) from holding The Erawan Group or give up 34.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Erawan Group vs. Premier Marketing Public
Performance |
Timeline |
Erawan Group |
Premier Marketing Public |
Erawan and Premier Marketing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erawan and Premier Marketing
The main advantage of trading using opposite Erawan and Premier Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erawan position performs unexpectedly, Premier Marketing 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 Premier Marketing will offset losses from the drop in Premier Marketing's long position.Erawan vs. Central Plaza Hotel | Erawan vs. Minor International Public | Erawan vs. Central Pattana Public | Erawan vs. CP ALL Public |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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