Correlation Between Charoen Pokphand and Charan Insurance
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Charan Insurance 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 Charan Insurance 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 Charan Insurance Public, you can compare the effects of market volatilities on Charoen Pokphand and Charan Insurance 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 Charan Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Charan Insurance.
Diversification Opportunities for Charoen Pokphand and Charan Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charoen and Charan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Charan Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charan Insurance 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 Charan Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charan Insurance Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Charan Insurance go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Charan Insurance
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to under-perform the Charan Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Foods is 66.69 times less risky than Charan Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The Charan Insurance Public is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Charan Insurance Public on November 2, 2024 and sell it today you would earn a total of 2,030 from holding Charan Insurance Public or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Charan Insurance Public
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Charan Insurance Public |
Charoen Pokphand and Charan Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Charan Insurance
The main advantage of trading using opposite Charoen Pokphand and Charan Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Charan Insurance 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 Charan Insurance will offset losses from the drop in Charan Insurance'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 |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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