Correlation Between Charoen Pokphand and San Shing
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and San Shing 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 San Shing 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 San Shing Fastech, you can compare the effects of market volatilities on Charoen Pokphand and San Shing 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 San Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and San Shing.
Diversification Opportunities for Charoen Pokphand and San Shing
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charoen and San is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech 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 San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and San Shing go up and down completely randomly.
Pair Corralation between Charoen Pokphand and San Shing
Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 1.39 times more return on investment than San Shing. However, Charoen Pokphand is 1.39 times more volatile than San Shing Fastech. It trades about 0.05 of its potential returns per unit of risk. San Shing Fastech is currently generating about 0.02 per unit of risk. If you would invest 7,730 in Charoen Pokphand Enterprise on September 4, 2024 and sell it today you would earn a total of 2,230 from holding Charoen Pokphand Enterprise or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Enterprise vs. San Shing Fastech
Performance |
| Timeline |
| Charoen Pokphand Ent |
| San Shing Fastech |
Charoen Pokphand and San Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and San Shing
The main advantage of trading using opposite Charoen Pokphand and San Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, San Shing 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 San Shing will offset losses from the drop in San Shing's long position.The idea behind Charoen Pokphand Enterprise and San Shing Fastech 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.| San Shing vs. Universal Microelectronics Co | San Shing vs. AVerMedia Technologies | San Shing vs. Symtek Automation Asia | San Shing vs. WiseChip Semiconductor |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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