Correlation Between Charoen Pokphand and Thonburi Medical
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Thonburi Medical 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 Thonburi Medical 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 Thonburi Medical Centre, you can compare the effects of market volatilities on Charoen Pokphand and Thonburi Medical 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 Thonburi Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Thonburi Medical.
Diversification Opportunities for Charoen Pokphand and Thonburi Medical
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charoen and Thonburi is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Thonburi Medical Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thonburi Medical Centre 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 Thonburi Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thonburi Medical Centre has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Thonburi Medical go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Thonburi Medical
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 129.64 times less return on investment than Thonburi Medical. But when comparing it to its historical volatility, Charoen Pokphand Foods is 30.16 times less risky than Thonburi Medical. It trades about 0.01 of its potential returns per unit of risk. Thonburi Medical Centre is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,978 in Thonburi Medical Centre on September 14, 2024 and sell it today you would earn a total of 472.00 from holding Thonburi Medical Centre or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Thonburi Medical Centre
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Thonburi Medical Centre |
Charoen Pokphand and Thonburi Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Thonburi Medical
The main advantage of trading using opposite Charoen Pokphand and Thonburi Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Thonburi Medical 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 Thonburi Medical will offset losses from the drop in Thonburi Medical'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 |
| Thonburi Medical vs. Aikchol Hospital Public | Thonburi Medical vs. Nonthavej Hospital Public | Thonburi Medical vs. Wattana Karnpaet Public | Thonburi Medical vs. Mahachai Hospital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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