Correlation Between S Hotels and Erawan

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

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

Diversification Opportunities for S Hotels and Erawan

0.47

Correlation Coefficient

S Hotels  Erawan

Very weak diversification

The 3 months correlation between SHR and Erawan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding S Hotels and and The Erawan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erawan Group and S Hotels 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 S Hotels and 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 S Hotels i.e., S Hotels and Erawan go up and down completely randomly.

Pair Corralation between S Hotels and Erawan

Assuming the 90 days trading horizon S Hotels and is expected to generate 1.06 times more return on investment than Erawan. However, S Hotels is 1.06 times more volatile than The Erawan Group. It trades about 0.08 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.01 per unit of risk. If you would invest  230.00  in S Hotels and on September 16, 2024 and sell it today you would earn a total of  22.00  from holding S Hotels and or generate 9.57% return on investment over 90 days.

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

S Hotels and  vs.  The Erawan Group

S Hotels

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in S Hotels and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, S Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 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.

Pair Trading with S Hotels and Erawan

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

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.