Correlation Between Erawan and Bhiraj Office

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

Diversification Opportunities for Erawan and Bhiraj Office

0.24

Correlation Coefficient

Erawan  Bhiraj Office

Modest diversification

The 3 months correlation between Erawan and Bhiraj is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Bhiraj Office Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhiraj Office Leasehold 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 Bhiraj Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhiraj Office Leasehold has no effect on the direction of Erawan i.e., Erawan and Bhiraj Office go up and down completely randomly.

Pair Corralation between Erawan and Bhiraj Office

Assuming the 90 days trading horizon Erawan is expected to generate 4.38 times less return on investment than Bhiraj Office. In addition to that, Erawan is 1.35 times more volatile than Bhiraj Office Leasehold. It trades about 0.03 of its total potential returns per unit of risk. Bhiraj Office Leasehold is currently generating about 0.17 per unit of volatility. If you would invest  443.00  in Bhiraj Office Leasehold on September 12, 2024 and sell it today you would earn a total of  77.00  from holding Bhiraj Office Leasehold or generate 17.38% return on investment over 90 days.

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

The Erawan Group  vs.  Bhiraj Office Leasehold

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.

Bhiraj Office Leasehold

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bhiraj Office Leasehold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bhiraj Office exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erawan and Bhiraj Office

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

The idea behind The Erawan Group and Bhiraj Office Leasehold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.