Correlation Between Spirent Communications and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Charoen Pokphand Foods, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Charoen Pokphand.
Diversification Opportunities for Spirent Communications and Charoen Pokphand
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Charoen is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and Spirent Communications 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 Spirent Communications plc 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 Foods has no effect on the direction of Spirent Communications i.e., Spirent Communications and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Spirent Communications and Charoen Pokphand
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the Charoen Pokphand. But the stock apears to be less risky and, when comparing its historical volatility, Spirent Communications plc is 1.79 times less risky than Charoen Pokphand. The stock trades about 0.0 of its potential returns per unit of risk. The Charoen Pokphand Foods is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Charoen Pokphand Foods on October 13, 2024 and sell it today you would earn a total of 7.00 from holding Charoen Pokphand Foods or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Spirent Communications |
| Charoen Pokphand Foods |
Spirent Communications and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Charoen Pokphand
The main advantage of trading using opposite Spirent Communications and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. MEDICAL FACILITIES NEW | Spirent Communications vs. GLOBUS MEDICAL A | Spirent Communications vs. Eidesvik Offshore ASA | Spirent Communications vs. MeVis Medical Solutions |
| Charoen Pokphand vs. Spirent Communications plc | Charoen Pokphand vs. Ribbon Communications | Charoen Pokphand vs. Forsys Metals Corp | Charoen Pokphand vs. Comba Telecom Systems |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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