Correlation Between Charoen Pokphand and RB Food
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and RB Food 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 RB Food 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 RB Food Supply, you can compare the effects of market volatilities on Charoen Pokphand and RB Food 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 RB Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and RB Food.
Diversification Opportunities for Charoen Pokphand and RB Food
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charoen and RBF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and RB Food Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Food Supply 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 RB Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Food Supply has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and RB Food go up and down completely randomly.
Pair Corralation between Charoen Pokphand and RB Food
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to under-perform the RB Food. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Foods is 3.53 times less risky than RB Food. The stock trades about -0.06 of its potential returns per unit of risk. The RB Food Supply is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 520.00 in RB Food Supply on September 13, 2024 and sell it today you would earn a total of 140.00 from holding RB Food Supply or generate 26.92% 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. RB Food Supply
Performance |
| Timeline |
| Charoen Pokphand Foods |
| RB Food Supply |
Charoen Pokphand and RB Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and RB Food
The main advantage of trading using opposite Charoen Pokphand and RB Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, RB Food 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 RB Food will offset losses from the drop in RB Food'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 |
| RB Food vs. Thai Union Group | RB Food vs. Thai Union Group | RB Food vs. Thai President Foods | RB Food vs. Thai Vegetable Oil |
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 CEOs Directory module to screen CEOs from public companies around the world.
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