Correlation Between WPG Holdings and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both WPG Holdings 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 WPG Holdings and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPG Holdings and Charoen Pokphand Enterprise, you can compare the effects of market volatilities on WPG Holdings 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 WPG Holdings with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and Charoen Pokphand.
Diversification Opportunities for WPG Holdings and Charoen Pokphand
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between WPG and Charoen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings 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 WPG Holdings 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 WPG Holdings 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 WPG Holdings i.e., WPG Holdings and Charoen Pokphand go up and down completely randomly.
Pair Corralation between WPG Holdings and Charoen Pokphand
Assuming the 90 days trading horizon WPG Holdings is expected to generate 1.82 times more return on investment than Charoen Pokphand. However, WPG Holdings is 1.82 times more volatile than Charoen Pokphand Enterprise. It trades about 0.05 of its potential returns per unit of risk. Charoen Pokphand Enterprise is currently generating about 0.02 per unit of risk. 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 |
WPG Holdings vs. Charoen Pokphand Enterprise
Performance |
| Timeline |
| WPG Holdings |
| Charoen Pokphand Ent |
WPG Holdings and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPG Holdings and Charoen Pokphand
The main advantage of trading using opposite WPG Holdings and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings 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.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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