Correlation Between Erawan and Amata Public

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

Diversification Opportunities for Erawan and Amata Public

0.18

Correlation Coefficient

Erawan  Amata Public

Average diversification

The 3 months correlation between Erawan and Amata is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Amata Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata Public 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 Amata Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Public has no effect on the direction of Erawan i.e., Erawan and Amata Public go up and down completely randomly.

Pair Corralation between Erawan and Amata Public

Assuming the 90 days trading horizon Erawan is expected to generate 1104.16 times less return on investment than Amata Public. But when comparing it to its historical volatility, The Erawan Group is 61.65 times less risky than Amata Public. It trades about 0.01 of its potential returns per unit of risk. Amata Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,270  in Amata Public on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Amata Public or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

The Erawan Group  vs.  Amata Public

Erawan Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days The Erawan Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Amata Public

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Amata Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively conflicting basic indicators, Amata Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erawan and Amata Public

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

The idea behind The Erawan Group and Amata Public 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.