Correlation Between Chumporn Palm and Chai Watana
Can any of the company-specific risk be diversified away by investing in both Chumporn Palm and Chai Watana 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 Chumporn Palm and Chai Watana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chumporn Palm Oil and Chai Watana Tannery, you can compare the effects of market volatilities on Chumporn Palm and Chai Watana 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 Chumporn Palm with a short position of Chai Watana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chumporn Palm and Chai Watana.
Diversification Opportunities for Chumporn Palm and Chai Watana
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chumporn and Chai is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chumporn Palm Oil and Chai Watana Tannery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chai Watana Tannery and Chumporn Palm 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 Chumporn Palm Oil are associated (or correlated) with Chai Watana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chai Watana Tannery has no effect on the direction of Chumporn Palm i.e., Chumporn Palm and Chai Watana go up and down completely randomly.
Pair Corralation between Chumporn Palm and Chai Watana
Assuming the 90 days trading horizon Chumporn Palm Oil is expected to generate 0.31 times more return on investment than Chai Watana. However, Chumporn Palm Oil is 3.27 times less risky than Chai Watana. It trades about 0.15 of its potential returns per unit of risk. Chai Watana Tannery is currently generating about -0.38 per unit of risk. If you would invest 286.00 in Chumporn Palm Oil on November 5, 2024 and sell it today you would earn a total of 8.00 from holding Chumporn Palm Oil or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Chumporn Palm Oil vs. Chai Watana Tannery
Performance |
| Timeline |
| Chumporn Palm Oil |
| Chai Watana Tannery |
Chumporn Palm and Chai Watana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chumporn Palm and Chai Watana
The main advantage of trading using opposite Chumporn Palm and Chai Watana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chumporn Palm position performs unexpectedly, Chai Watana 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 Chai Watana will offset losses from the drop in Chai Watana's long position.| Chumporn Palm vs. Univanich Palm Oil | Chumporn Palm vs. Chiangmai Frozen Foods | Chumporn Palm vs. Dynasty Ceramic Public | Chumporn Palm vs. GFPT Public |
| Chai Watana vs. Chumporn Palm Oil | Chai Watana vs. Eastern Commercial Leasing | Chai Watana vs. Cal Comp Electronics Public | Chai Watana vs. AAPICO Hitech 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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