Correlation Between Charoen Pokphand and Farcent Enterprise
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Farcent Enterprise 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 Farcent Enterprise 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 Farcent Enterprise Co, you can compare the effects of market volatilities on Charoen Pokphand and Farcent Enterprise 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 Farcent Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Farcent Enterprise.
Diversification Opportunities for Charoen Pokphand and Farcent Enterprise
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charoen and Farcent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Farcent Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farcent Enterprise 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 Farcent Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farcent Enterprise has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Farcent Enterprise go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Farcent Enterprise
Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 0.99 times more return on investment than Farcent Enterprise. However, Charoen Pokphand Enterprise is 1.01 times less risky than Farcent Enterprise. It trades about 0.27 of its potential returns per unit of risk. Farcent Enterprise Co is currently generating about 0.15 per unit of risk. If you would invest 9,660 in Charoen Pokphand Enterprise on September 14, 2024 and sell it today you would earn a total of 280.00 from holding Charoen Pokphand Enterprise or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Charoen Pokphand Enterprise vs. Farcent Enterprise Co
Performance |
| Timeline |
| Charoen Pokphand Ent |
| Farcent Enterprise |
Charoen Pokphand and Farcent Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Farcent Enterprise
The main advantage of trading using opposite Charoen Pokphand and Farcent Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Farcent Enterprise 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 Farcent Enterprise will offset losses from the drop in Farcent Enterprise's long position.| Charoen Pokphand vs. Great Wall Enterprise | Charoen Pokphand vs. TTET Union Corp | Charoen Pokphand vs. Uni President Enterprises Corp | Charoen Pokphand vs. Lien Hwa Industrial |
| Farcent Enterprise vs. Charoen Pokphand Enterprise | Farcent Enterprise vs. Yung Chi Paint | Farcent Enterprise vs. TTET Union Corp | Farcent Enterprise vs. Taiwan Secom Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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