Correlation Between Charoen Pokphand and BEC World
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and BEC World 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 BEC World 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 BEC World Public, you can compare the effects of market volatilities on Charoen Pokphand and BEC World 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 BEC World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and BEC World.
Diversification Opportunities for Charoen Pokphand and BEC World
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and BEC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and BEC World Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEC World 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 BEC World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEC World Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and BEC World go up and down completely randomly.
Pair Corralation between Charoen Pokphand and BEC World
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 55.6 times less return on investment than BEC World. But when comparing it to its historical volatility, Charoen Pokphand Foods is 27.04 times less risky than BEC World. It trades about 0.02 of its potential returns per unit of risk. BEC World Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 895.00 in BEC World Public on November 27, 2024 and sell it today you would lose (503.00) from holding BEC World Public or give up 56.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. BEC World Public
Performance |
| Timeline |
| Charoen Pokphand Foods |
| BEC World Public |
Charoen Pokphand and BEC World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and BEC World
The main advantage of trading using opposite Charoen Pokphand and BEC World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, BEC World 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 BEC World will offset losses from the drop in BEC World's long position.| Charoen Pokphand vs. CP ALL Public | Charoen Pokphand vs. PTT Public | Charoen Pokphand vs. Bangkok Bank Public | Charoen Pokphand vs. SCB X Public |
| BEC World vs. Land and Houses | BEC World vs. AP Public | BEC World vs. Bangkok Bank Public | BEC World vs. Charoen Pokphand Foods |
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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