Correlation Between Gunkul Engineering and Erawan

Can any of the company-specific risk be diversified away by investing in both Gunkul Engineering 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 Gunkul Engineering and Erawan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunkul Engineering Public and The Erawan Group, you can compare the effects of market volatilities on Gunkul Engineering 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 Gunkul Engineering with a short position of Erawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunkul Engineering and Erawan.

Diversification Opportunities for Gunkul Engineering and Erawan

0.48

Correlation Coefficient

Gunkul Engineering  Erawan

Very weak diversification

The 3 months correlation between Gunkul and Erawan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gunkul Engineering Public and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and Gunkul Engineering 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 Gunkul Engineering Public 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 Gunkul Engineering i.e., Gunkul Engineering and Erawan go up and down completely randomly.

Pair Corralation between Gunkul Engineering and Erawan

Assuming the 90 days trading horizon Gunkul Engineering Public is expected to under-perform the Erawan. But the stock apears to be less risky and, when comparing its historical volatility, Gunkul Engineering Public is 1.0 times less risky than Erawan. The stock trades about -0.08 of its potential returns per unit of risk. The The Erawan Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  396.00  in The Erawan Group on September 12, 2024 and sell it today you would earn a total of  10.00  from holding The Erawan Group or generate 2.53% return on investment over 90 days.

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

Gunkul Engineering Public  vs.  The Erawan Group

Gunkul Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunkul Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Erawan Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 2 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gunkul Engineering and Erawan

The main advantage of trading using opposite Gunkul Engineering and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunkul Engineering 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 Gunkul Engineering Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.