Correlation Between Erawan and Porn Prom

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

Diversification Opportunities for Erawan and Porn Prom

0.26

Correlation Coefficient

Erawan  Porn Prom

Modest diversification

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

Pair Corralation between Erawan and Porn Prom

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Porn Prom. But the stock apears to be less risky and, when comparing its historical volatility, The Erawan Group is 1.25 times less risky than Porn Prom. The stock trades about -0.27 of its potential returns per unit of risk. The Porn Prom Metal is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Porn Prom Metal on October 22, 2024 and sell it today you would earn a total of  28.00  from holding Porn Prom Metal or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

The Erawan Group  vs.  Porn Prom Metal

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Porn Prom Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porn Prom Metal 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 primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Erawan and Porn Prom

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

The idea behind The Erawan Group and Porn Prom Metal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.