Correlation Between Charoen Pokphand and NSL Foods
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and NSL Foods 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 NSL Foods 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 NSL Foods Public, you can compare the effects of market volatilities on Charoen Pokphand and NSL Foods 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 NSL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and NSL Foods.
Diversification Opportunities for Charoen Pokphand and NSL Foods
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charoen and NSL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and NSL Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSL Foods Public 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 NSL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSL Foods Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and NSL Foods go up and down completely randomly.
Pair Corralation between Charoen Pokphand and NSL Foods
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 2.58 times less return on investment than NSL Foods. But when comparing it to its historical volatility, Charoen Pokphand Foods is 1.45 times less risky than NSL Foods. It trades about 0.03 of its potential returns per unit of risk. NSL Foods Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,266 in NSL Foods Public on September 4, 2024 and sell it today you would earn a total of 884.00 from holding NSL Foods Public or generate 39.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. NSL Foods Public
Performance |
| Timeline |
| Charoen Pokphand Foods |
| NSL Foods Public |
Charoen Pokphand and NSL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and NSL Foods
The main advantage of trading using opposite Charoen Pokphand and NSL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, NSL Foods 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 NSL Foods will offset losses from the drop in NSL Foods' 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 |
| NSL Foods vs. Kingsmen CMTI Public | NSL Foods vs. Hydrotek Public | NSL Foods vs. Karmarts Public | NSL Foods vs. KC Metalsheet 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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