Correlation Between Charoen Pokphand and Central Plaza
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Central Plaza 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 Central Plaza 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 Central Plaza Hotel, you can compare the effects of market volatilities on Charoen Pokphand and Central Plaza 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 Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Central Plaza.
Diversification Opportunities for Charoen Pokphand and Central Plaza
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charoen and Central is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel 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 Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Central Plaza go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Central Plaza
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to under-perform the Central Plaza. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Foods is 1.95 times less risky than Central Plaza. The stock trades about -0.08 of its potential returns per unit of risk. The Central Plaza Hotel is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,525 in Central Plaza Hotel on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Central Plaza Hotel or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Central Plaza Hotel
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Central Plaza Hotel |
Charoen Pokphand and Central Plaza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Central Plaza
The main advantage of trading using opposite Charoen Pokphand and Central Plaza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Central Plaza 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 Central Plaza will offset losses from the drop in Central Plaza'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 |
| Central Plaza vs. Central Pattana Public | Central Plaza vs. CP ALL Public | Central Plaza vs. Bangkok Dusit Medical | Central Plaza vs. Airports of Thailand |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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