Correlation Between Charoen Pokphand and KGI Securities
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and KGI Securities 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 KGI Securities 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 KGI Securities Public, you can compare the effects of market volatilities on Charoen Pokphand and KGI Securities 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 KGI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and KGI Securities.
Diversification Opportunities for Charoen Pokphand and KGI Securities
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and KGI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities 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 KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and KGI Securities go up and down completely randomly.
Pair Corralation between Charoen Pokphand and KGI Securities
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.87 times more return on investment than KGI Securities. However, Charoen Pokphand is 1.87 times more volatile than KGI Securities Public. It trades about 0.02 of its potential returns per unit of risk. KGI Securities Public is currently generating about 0.01 per unit of risk. If you would invest 2,278 in Charoen Pokphand Foods on August 28, 2024 and sell it today you would earn a total of 172.00 from holding Charoen Pokphand Foods or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. KGI Securities Public
Performance |
| Timeline |
| Charoen Pokphand Foods |
| KGI Securities Public |
Charoen Pokphand and KGI Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and KGI Securities
The main advantage of trading using opposite Charoen Pokphand and KGI Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, KGI Securities 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 KGI Securities will offset losses from the drop in KGI Securities' long position.The idea behind Charoen Pokphand Foods and KGI Securities Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KGI Securities vs. Interlink Telecom Public | KGI Securities vs. BPS TECHNOLOGY PUBLIC | KGI Securities vs. Charoen Pokphand Foods | KGI Securities vs. Sun Vending Technology |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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