Correlation Between Erawan and S Khonkaen

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

Diversification Opportunities for Erawan and S Khonkaen

-0.26

Correlation Coefficient

Erawan  S Khonkaen

Very good diversification

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

Pair Corralation between Erawan and S Khonkaen

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the S Khonkaen. In addition to that, Erawan is 2.54 times more volatile than S Khonkaen Foods. It trades about -0.17 of its total potential returns per unit of risk. S Khonkaen Foods is currently generating about 0.07 per unit of volatility. If you would invest  428.00  in S Khonkaen Foods on December 30, 2024 and sell it today you would earn a total of  16.00  from holding S Khonkaen Foods or generate 3.74% return on investment over 90 days.

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

The Erawan Group  vs.  S Khonkaen Foods

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.

S Khonkaen Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in S Khonkaen Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, S Khonkaen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Erawan and S Khonkaen

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

The idea behind The Erawan Group and S Khonkaen Foods 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.