Correlation Between Charoen Pokphand and Krung Thai
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Krung Thai 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 Krung Thai 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 Krung Thai Bank, you can compare the effects of market volatilities on Charoen Pokphand and Krung Thai 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 Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Krung Thai.
Diversification Opportunities for Charoen Pokphand and Krung Thai
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charoen and Krung is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank 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 Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Krung Thai go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Krung Thai
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to under-perform the Krung Thai. In addition to that, Charoen Pokphand is 1.51 times more volatile than Krung Thai Bank. It trades about -0.14 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about -0.14 per unit of volatility. If you would invest 2,050 in Krung Thai Bank on September 1, 2024 and sell it today you would lose (50.00) from holding Krung Thai Bank or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Krung Thai Bank
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Krung Thai Bank |
Charoen Pokphand and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Krung Thai
The main advantage of trading using opposite Charoen Pokphand and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Krung Thai 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 Krung Thai will offset losses from the drop in Krung Thai'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 |
| Krung Thai vs. The Siam Commercial | Krung Thai vs. Thai Oil Public | Krung Thai vs. Thai Union Group | Krung Thai vs. Kasikornbank 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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