Correlation Between Charoen Pokphand and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Chi Hua 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 Charoen Pokphand and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charoen Pokphand Enterprise and Chi Hua Fitness, you can compare the effects of market volatilities on Charoen Pokphand and Chi Hua 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 Charoen Pokphand with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Chi Hua.
Diversification Opportunities for Charoen Pokphand and Chi Hua
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charoen and Chi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Charoen Pokphand 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 Charoen Pokphand Enterprise are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Chi Hua go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Chi Hua
Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 0.68 times more return on investment than Chi Hua. However, Charoen Pokphand Enterprise is 1.48 times less risky than Chi Hua. It trades about 0.17 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.28 per unit of risk. If you would invest 9,100 in Charoen Pokphand Enterprise on October 29, 2024 and sell it today you would earn a total of 180.00 from holding Charoen Pokphand Enterprise or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Enterprise vs. Chi Hua Fitness
Performance |
| Timeline |
| Charoen Pokphand Ent |
| Chi Hua Fitness |
Charoen Pokphand and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Chi Hua
The main advantage of trading using opposite Charoen Pokphand and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Charoen Pokphand vs. Uni President Enterprises Corp | Charoen Pokphand vs. Taisun Enterprise Co | Charoen Pokphand vs. AGV Products Corp | Charoen Pokphand vs. Great Wall Enterprise |
| Chi Hua vs. U Media Communications | Chi Hua vs. Far EasTone Telecommunications | Chi Hua vs. Oceanic Beverages Co | Chi Hua vs. PlayNitride |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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