Correlation Between International Network and Erawan

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

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

Diversification Opportunities for International Network and Erawan

-0.31

Correlation Coefficient

International Network  Erawan

Very good diversification

The 3 months correlation between International and Erawan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding International Network System and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and International Network 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 International Network System 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 International Network i.e., International Network and Erawan go up and down completely randomly.

Pair Corralation between International Network and Erawan

Assuming the 90 days trading horizon International Network System is expected to generate 1.43 times more return on investment than Erawan. However, International Network is 1.43 times more volatile than The Erawan Group. It trades about 0.07 of its potential returns per unit of risk. The Erawan Group is currently generating about -0.16 per unit of risk. If you would invest  128.00  in International Network System on December 25, 2024 and sell it today you would earn a total of  15.00  from holding International Network System or generate 11.72% return on investment over 90 days.

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

International Network System  vs.  The Erawan Group

International Network

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Network System are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, International Network disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with International Network and Erawan

The main advantage of trading using opposite International Network and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Network 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 International Network System 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.