Correlation Between Charoen Pokphand and Thai Union
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Thai Union 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 Thai Union 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 Thai Union Group, you can compare the effects of market volatilities on Charoen Pokphand and Thai Union 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 Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Thai Union.
Diversification Opportunities for Charoen Pokphand and Thai Union
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charoen and Thai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group 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 Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Thai Union go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Thai Union
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 0.78 times more return on investment than Thai Union. However, Charoen Pokphand Foods is 1.28 times less risky than Thai Union. It trades about -0.03 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.32 per unit of risk. If you would invest 2,470 in Charoen Pokphand Foods on August 28, 2024 and sell it today you would lose (20.00) from holding Charoen Pokphand Foods or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Thai Union Group
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Thai Union Group |
Charoen Pokphand and Thai Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Thai Union
The main advantage of trading using opposite Charoen Pokphand and Thai Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Thai Union 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 Thai Union will offset losses from the drop in Thai Union's long position.The idea behind Charoen Pokphand Foods and Thai Union Group 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.| Thai Union vs. Charoen Pokphand Foods | Thai Union vs. CP ALL Public | Thai Union vs. Minor International Public | Thai Union vs. Advanced Info Service |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |