Correlation Between Grande Hospitality and Erawan

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Can any of the company-specific risk be diversified away by investing in both Grande Hospitality and Erawan 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 Grande Hospitality and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grande Hospitality Real and The Erawan Group, you can compare the effects of market volatilities on Grande Hospitality and Erawan 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 Grande Hospitality with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Hospitality and Erawan.

Diversification Opportunities for Grande Hospitality and Erawan

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Grande and Erawan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Grande Hospitality Real and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and Grande Hospitality 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 Grande Hospitality Real are associated (or correlated) with Erawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erawan Group has no effect on the direction of Grande Hospitality i.e., Grande Hospitality and Erawan go up and down completely randomly.

Pair Corralation between Grande Hospitality and Erawan

Assuming the 90 days trading horizon Grande Hospitality Real is expected to under-perform the Erawan. But the stock apears to be less risky and, when comparing its historical volatility, Grande Hospitality Real is 2.06 times less risky than Erawan. The stock trades about -0.02 of its potential returns per unit of risk. The The Erawan Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  374.00  in The Erawan Group on September 4, 2024 and sell it today you would earn a total of  36.00  from holding The Erawan Group or generate 9.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Grande Hospitality Real  vs.  The Erawan Group

 Performance 
       Timeline  
Grande Hospitality Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grande Hospitality Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grande Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Erawan Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Erawan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grande Hospitality and Erawan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grande Hospitality and Erawan

The main advantage of trading using opposite Grande Hospitality and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Hospitality position performs unexpectedly, Erawan 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 Erawan will offset losses from the drop in Erawan's long position.
The idea behind Grande Hospitality Real and The Erawan Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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