Correlation Between Yung Chi and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Yung Chi 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 Yung Chi and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yung Chi Paint and Charoen Pokphand Enterprise, you can compare the effects of market volatilities on Yung Chi 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 Yung Chi with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yung Chi and Charoen Pokphand.
Diversification Opportunities for Yung Chi and Charoen Pokphand
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yung and Charoen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Yung Chi Paint 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 Yung Chi 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 Yung Chi Paint 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 Yung Chi i.e., Yung Chi and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Yung Chi and Charoen Pokphand
Assuming the 90 days trading horizon Yung Chi is expected to generate 3.64 times less return on investment than Charoen Pokphand. But when comparing it to its historical volatility, Yung Chi Paint is 1.62 times less risky than Charoen Pokphand. It trades about 0.01 of its potential returns per unit of risk. Charoen Pokphand Enterprise is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,300 in Charoen Pokphand Enterprise on September 14, 2024 and sell it today you would earn a total of 530.00 from holding Charoen Pokphand Enterprise or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yung Chi Paint vs. Charoen Pokphand Enterprise
Performance |
| Timeline |
| Yung Chi Paint |
| Charoen Pokphand Ent |
Yung Chi and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yung Chi and Charoen Pokphand
The main advantage of trading using opposite Yung Chi and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yung Chi 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.| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials Co |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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