Correlation Between Jay Mart and Erawan

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

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

Diversification Opportunities for Jay Mart and Erawan

0.61

Correlation Coefficient

Jay Mart  Erawan

Poor diversification

The 3 months correlation between Jay and Erawan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jay Mart Public and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and Jay Mart 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 Jay Mart Public 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 Jay Mart i.e., Jay Mart and Erawan go up and down completely randomly.

Pair Corralation between Jay Mart and Erawan

Assuming the 90 days trading horizon Jay Mart Public is expected to generate 1.41 times more return on investment than Erawan. However, Jay Mart is 1.41 times more volatile than The Erawan Group. It trades about 0.17 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.13 per unit of risk. If you would invest  0.00  in Jay Mart Public on September 3, 2024 and sell it today you would earn a total of  1,410  from holding Jay Mart Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Jay Mart Public  vs.  The Erawan Group

Jay Mart Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jay Mart Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Jay Mart reported solid returns over the last few months and may actually be approaching a breakup point.

Erawan Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Erawan Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Erawan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jay Mart and Erawan

The main advantage of trading using opposite Jay Mart and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jay Mart 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 Jay Mart Public 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.