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

-0.59

Correlation Coefficient

Erawan  Premier Marketing

Excellent diversification

The 3 months correlation between Erawan and Premier is -0.59. 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 under-perform the Premier Marketing. In addition to that, Erawan is 1.3 times more volatile than Premier Marketing Public. It trades about -0.17 of its total potential returns per unit of risk. Premier Marketing Public is currently generating about 0.17 per unit of volatility. If you would invest  846.00  in Premier Marketing Public on December 29, 2024 and sell it today you would earn a total of  174.00  from holding Premier Marketing Public or generate 20.57% return on investment over 90 days.

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

The Erawan Group  vs.  Premier Marketing 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.

Premier Marketing Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Marketing Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Premier Marketing disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind The Erawan Group and Premier Marketing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.