Correlation Between Erawan and Impact Growth

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

Diversification Opportunities for Erawan and Impact Growth

0.62

Correlation Coefficient

Erawan  Impact Growth

Poor diversification

The 3 months correlation between Erawan and Impact is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and Impact Growth REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Growth REIT 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 Impact Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Growth REIT has no effect on the direction of Erawan i.e., Erawan and Impact Growth go up and down completely randomly.

Pair Corralation between Erawan and Impact Growth

Assuming the 90 days trading horizon The Erawan Group is expected to under-perform the Impact Growth. In addition to that, Erawan is 1.78 times more volatile than Impact Growth REIT. It trades about -0.09 of its total potential returns per unit of risk. Impact Growth REIT is currently generating about -0.16 per unit of volatility. If you would invest  1,218  in Impact Growth REIT on September 27, 2024 and sell it today you would lose (138.00) from holding Impact Growth REIT or give up 11.33% of portfolio value over 90 days.

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

The Erawan Group  vs.  Impact Growth REIT

Erawan Group

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Impact Growth REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Growth REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Erawan and Impact Growth

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

The idea behind The Erawan Group and Impact Growth REIT 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.