Correlation Between Sunny Friend and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Sunny Friend 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 Sunny Friend and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Charoen Pokphand Enterprise, you can compare the effects of market volatilities on Sunny Friend 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 Sunny Friend with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Charoen Pokphand.
Diversification Opportunities for Sunny Friend and Charoen Pokphand
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sunny and Charoen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental 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 Sunny Friend 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 Sunny Friend Environmental 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 Sunny Friend i.e., Sunny Friend and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Sunny Friend and Charoen Pokphand
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Charoen Pokphand. In addition to that, Sunny Friend is 3.64 times more volatile than Charoen Pokphand Enterprise. It trades about -0.13 of its total potential returns per unit of risk. Charoen Pokphand Enterprise is currently generating about 0.13 per unit of volatility. If you would invest 9,750 in Charoen Pokphand Enterprise on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Charoen Pokphand Enterprise or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Charoen Pokphand Enterprise
Performance |
| Timeline |
| Sunny Friend Environ |
| Charoen Pokphand Ent |
Sunny Friend and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Charoen Pokphand
The main advantage of trading using opposite Sunny Friend and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend 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.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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