Correlation Between Erawan and NCL International

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

Diversification Opportunities for Erawan and NCL International

0.64

Correlation Coefficient

Erawan  NCL International

Poor diversification

The 3 months correlation between Erawan and NCL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Erawan Group and NCL International Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCL International 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 NCL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCL International has no effect on the direction of Erawan i.e., Erawan and NCL International go up and down completely randomly.

Pair Corralation between Erawan and NCL International

Assuming the 90 days trading horizon The Erawan Group is expected to generate 0.99 times more return on investment than NCL International. However, The Erawan Group is 1.01 times less risky than NCL International. It trades about 0.05 of its potential returns per unit of risk. NCL International Logistics is currently generating about 0.05 per unit of risk. If you would invest  542.00  in The Erawan Group on September 14, 2024 and sell it today you would lose (150.00) from holding The Erawan Group or give up 27.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.62%
Values	Daily Returns

The Erawan Group  vs.  NCL International Logistics

Erawan Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 1 (%) 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.

NCL International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCL International Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Erawan and NCL International

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

The idea behind The Erawan Group and NCL International Logistics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.