Correlation Between WHA Utilities and Erawan

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

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

Diversification Opportunities for WHA Utilities and Erawan

-0.27

Correlation Coefficient

WHA Utilities  Erawan

Very good diversification

The 3 months correlation between WHA and Erawan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding WHA Utilities 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 WHA Utilities 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 WHA Utilities 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 WHA Utilities i.e., WHA Utilities and Erawan go up and down completely randomly.

Pair Corralation between WHA Utilities and Erawan

Assuming the 90 days trading horizon WHA Utilities is expected to generate 30.83 times less return on investment than Erawan. But when comparing it to its historical volatility, WHA Utilities and is 29.22 times less risky than Erawan. It trades about 0.04 of its potential returns per unit of risk. The Erawan Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  447.00  in The Erawan Group on September 28, 2024 and sell it today you would lose (57.00) from holding The Erawan Group or give up 12.75% of portfolio value over 90 days.

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

WHA Utilities and  vs.  The Erawan Group

WHA Utilities

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Utilities and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, WHA Utilities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with WHA Utilities and Erawan

The main advantage of trading using opposite WHA Utilities and Erawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WHA Utilities 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 WHA Utilities 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.