Correlation Between Charoen Pokphand and Taokaenoi Food
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Taokaenoi 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 Taokaenoi 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 Taokaenoi Food Marketing, you can compare the effects of market volatilities on Charoen Pokphand and Taokaenoi 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 Taokaenoi Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Taokaenoi Food.
Diversification Opportunities for Charoen Pokphand and Taokaenoi Food
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charoen and Taokaenoi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Taokaenoi Food Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taokaenoi Food Marketing 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 Taokaenoi Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taokaenoi Food Marketing has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Taokaenoi Food go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Taokaenoi Food
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 126.81 times less return on investment than Taokaenoi Food. But when comparing it to its historical volatility, Charoen Pokphand Foods is 30.2 times less risky than Taokaenoi Food. It trades about 0.01 of its potential returns per unit of risk. Taokaenoi Food Marketing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Taokaenoi Food Marketing on September 14, 2024 and sell it today you would lose (242.00) from holding Taokaenoi Food Marketing or give up 22.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Taokaenoi Food Marketing
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Taokaenoi Food Marketing |
Charoen Pokphand and Taokaenoi Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Taokaenoi Food
The main advantage of trading using opposite Charoen Pokphand and Taokaenoi Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Taokaenoi 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 Taokaenoi Food will offset losses from the drop in Taokaenoi 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 |
| Taokaenoi Food vs. CP ALL Public | Taokaenoi Food vs. Carabao Group Public | Taokaenoi Food vs. Thai Union Group | Taokaenoi Food vs. Minor International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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