Correlation Between Lien Hwa and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Lien Hwa and Charoen Pokphand 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 Lien Hwa and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lien Hwa Industrial and Charoen Pokphand Enterprise, you can compare the effects of market volatilities on Lien Hwa and Charoen Pokphand 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 Lien Hwa with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Hwa and Charoen Pokphand.
Diversification Opportunities for Lien Hwa and Charoen Pokphand
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lien and Charoen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lien Hwa Industrial and Charoen Pokphand Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Ent and Lien Hwa 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 Lien Hwa Industrial are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Ent has no effect on the direction of Lien Hwa i.e., Lien Hwa and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Lien Hwa and Charoen Pokphand
Assuming the 90 days trading horizon Lien Hwa Industrial is expected to under-perform the Charoen Pokphand. In addition to that, Lien Hwa is 1.59 times more volatile than Charoen Pokphand Enterprise. It trades about -0.34 of its total potential returns per unit of risk. Charoen Pokphand Enterprise is currently generating about -0.12 per unit of volatility. If you would invest 9,760 in Charoen Pokphand Enterprise on October 22, 2024 and sell it today you would lose (540.00) from holding Charoen Pokphand Enterprise or give up 5.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lien Hwa Industrial vs. Charoen Pokphand Enterprise
Performance |
| Timeline |
| Lien Hwa Industrial |
| Charoen Pokphand Ent |
Lien Hwa and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Hwa and Charoen Pokphand
The main advantage of trading using opposite Lien Hwa and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Hwa position performs unexpectedly, Charoen Pokphand 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 Charoen Pokphand will offset losses from the drop in Charoen Pokphand's long position.| Lien Hwa vs. Great Wall Enterprise | Lien Hwa vs. Lian Hwa Foods | Lien Hwa vs. Charoen Pokphand Enterprise | Lien Hwa vs. Uni President Enterprises Corp |
| 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 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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