Correlation Between Charoen Pokphand and Bangkok Aviation
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Bangkok Aviation 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 Charoen Pokphand and Bangkok Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charoen Pokphand Foods and Bangkok Aviation Fuel, you can compare the effects of market volatilities on Charoen Pokphand and Bangkok Aviation 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 Charoen Pokphand with a short position of Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Bangkok Aviation.
Diversification Opportunities for Charoen Pokphand and Bangkok Aviation
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Charoen and Bangkok is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel and Charoen Pokphand 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 Charoen Pokphand Foods are associated (or correlated) with Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Bangkok Aviation go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Bangkok Aviation
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 0.88 times more return on investment than Bangkok Aviation. However, Charoen Pokphand Foods is 1.14 times less risky than Bangkok Aviation. It trades about 0.02 of its potential returns per unit of risk. Bangkok Aviation Fuel is currently generating about -0.12 per unit of risk. If you would invest 2,104 in Charoen Pokphand Foods on November 1, 2024 and sell it today you would earn a total of 176.00 from holding Charoen Pokphand Foods or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Bangkok Aviation Fuel
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Bangkok Aviation Fuel |
Charoen Pokphand and Bangkok Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Bangkok Aviation
The main advantage of trading using opposite Charoen Pokphand and Bangkok Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Bangkok Aviation 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 Bangkok Aviation will offset losses from the drop in Bangkok Aviation's long position.| Charoen Pokphand vs. CP ALL Public | Charoen Pokphand vs. The Siam Cement | Charoen Pokphand vs. OSOTSPA PCL NVDR | Charoen Pokphand vs. The Siam Commercial |
| Bangkok Aviation vs. Synnex Public | Bangkok Aviation vs. SiS Distribution Public | Bangkok Aviation vs. Thoresen Thai Agencies | Bangkok Aviation vs. SVI Public |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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