Correlation Between Erawan and Siam City

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

Diversification Opportunities for Erawan and Siam City

-0.02

Correlation Coefficient

Erawan  Siam City

Good diversification

The 3 months correlation between Erawan and Siam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Siam City Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam City Cement 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 Siam City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam City Cement has no effect on the direction of Erawan i.e., Erawan and Siam City go up and down completely randomly.

Pair Corralation between Erawan and Siam City

Assuming the 90 days trading horizon Erawan is expected to generate 1.04 times less return on investment than Siam City. In addition to that, Erawan is 1.33 times more volatile than Siam City Cement. It trades about 0.02 of its total potential returns per unit of risk. Siam City Cement is currently generating about 0.03 per unit of volatility. If you would invest  15,900  in Siam City Cement on September 13, 2024 and sell it today you would earn a total of  350.00  from holding Siam City Cement or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

The Erawan Group  vs.  Siam City Cement

Erawan Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Erawan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Siam City Cement

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siam City Cement are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Siam City 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 Siam City

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

The idea behind The Erawan Group and Siam City Cement 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.