Correlation Between Charoen Pokphand and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and WPG Holdings 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 WPG Holdings 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 WPG Holdings, you can compare the effects of market volatilities on Charoen Pokphand and WPG Holdings 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 WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and WPG Holdings.
Diversification Opportunities for Charoen Pokphand and WPG Holdings
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charoen and WPG is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and WPG Holdings go up and down completely randomly.
Pair Corralation between Charoen Pokphand and WPG Holdings
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 3.69 times less return on investment than WPG Holdings. But when comparing it to its historical volatility, Charoen Pokphand Enterprise is 1.82 times less risky than WPG Holdings. It trades about 0.02 of its potential returns per unit of risk. WPG Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,390 in WPG Holdings on September 4, 2024 and sell it today you would earn a total of 1,730 from holding WPG Holdings or generate 32.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Enterprise vs. WPG Holdings
Performance |
| Timeline |
| Charoen Pokphand Ent |
| WPG Holdings |
Charoen Pokphand and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and WPG Holdings
The main advantage of trading using opposite Charoen Pokphand and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' long position.The idea behind Charoen Pokphand Enterprise and WPG Holdings 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.| WPG Holdings vs. Synnex Technology International | WPG Holdings vs. Powertech Technology | WPG Holdings vs. Wistron Corp | WPG Holdings vs. Chicony Electronics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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