Correlation Between Charoen Pokphand and Land
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Land 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 Land 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 Land and Houses, you can compare the effects of market volatilities on Charoen Pokphand and Land 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 Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Land.
Diversification Opportunities for Charoen Pokphand and Land
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charoen and Land is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Land and Houses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land and Houses 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 Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land and Houses has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Land go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Land
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.26 times more return on investment than Land. However, Charoen Pokphand is 1.26 times more volatile than Land and Houses. It trades about -0.24 of its potential returns per unit of risk. Land and Houses is currently generating about -0.41 per unit of risk. If you would invest 2,230 in Charoen Pokphand Foods on November 9, 2024 and sell it today you would lose (250.00) from holding Charoen Pokphand Foods or give up 11.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Land and Houses
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Land and Houses |
Charoen Pokphand and Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Land
The main advantage of trading using opposite Charoen Pokphand and Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Land 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 Land will offset losses from the drop in Land'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 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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