Correlation Between Charoen Pokphand and Sonic Interfreight
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Sonic Interfreight 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 Sonic Interfreight 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 Sonic Interfreight Public, you can compare the effects of market volatilities on Charoen Pokphand and Sonic Interfreight 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 Sonic Interfreight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Sonic Interfreight.
Diversification Opportunities for Charoen Pokphand and Sonic Interfreight
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charoen and Sonic is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Sonic Interfreight Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Interfreight 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 Sonic Interfreight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Interfreight Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Sonic Interfreight go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Sonic Interfreight
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 0.68 times more return on investment than Sonic Interfreight. However, Charoen Pokphand Foods is 1.48 times less risky than Sonic Interfreight. It trades about 0.01 of its potential returns per unit of risk. Sonic Interfreight Public is currently generating about -0.03 per unit of risk. If you would invest 2,297 in Charoen Pokphand Foods on September 2, 2024 and sell it today you would earn a total of 93.00 from holding Charoen Pokphand Foods or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Sonic Interfreight Public
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Sonic Interfreight Public |
Charoen Pokphand and Sonic Interfreight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Sonic Interfreight
The main advantage of trading using opposite Charoen Pokphand and Sonic Interfreight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Sonic Interfreight 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 Sonic Interfreight will offset losses from the drop in Sonic Interfreight'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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