Correlation Between Erawan and QTC Energy

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

Diversification Opportunities for Erawan and QTC Energy

0.82

Correlation Coefficient

Erawan  QTC Energy

Very poor diversification

The 3 months correlation between Erawan and QTC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and QTC Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QTC Energy 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 QTC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QTC Energy Public has no effect on the direction of Erawan i.e., Erawan and QTC Energy go up and down completely randomly.

Pair Corralation between Erawan and QTC Energy

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the QTC Energy. In addition to that, Erawan is 1.49 times more volatile than QTC Energy Public. It trades about -0.08 of its total potential returns per unit of risk. QTC Energy Public is currently generating about -0.01 per unit of volatility. If you would invest  380.00  in QTC Energy Public on October 26, 2024 and sell it today you would lose (6.00) from holding QTC Energy Public or give up 1.58% of portfolio value over 90 days.

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

The Erawan Group  vs.  QTC Energy 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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

QTC Energy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QTC Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, QTC Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Erawan and QTC Energy

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

The idea behind The Erawan Group and QTC Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.