Correlation Between Charoen Pokphand and Alumindo Light
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Alumindo Light 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 Alumindo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charoen Pokphand Indonesia and Alumindo Light Metal, you can compare the effects of market volatilities on Charoen Pokphand and Alumindo Light 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 Alumindo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Alumindo Light.
Diversification Opportunities for Charoen Pokphand and Alumindo Light
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Charoen and Alumindo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal 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 Indonesia are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Alumindo Light go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Alumindo Light
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Alumindo Light. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.75 times less risky than Alumindo Light. The stock trades about -0.03 of its potential returns per unit of risk. The Alumindo Light Metal is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Alumindo Light Metal on November 28, 2024 and sell it today you would earn a total of 100.00 from holding Alumindo Light Metal or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Indonesia vs. Alumindo Light Metal
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Alumindo Light Metal |
Charoen Pokphand and Alumindo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Alumindo Light
The main advantage of trading using opposite Charoen Pokphand and Alumindo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Alumindo Light 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 Alumindo Light will offset losses from the drop in Alumindo Light's long position.| Charoen Pokphand vs. Japfa Comfeed Indonesia | Charoen Pokphand vs. Kalbe Farma Tbk | Charoen Pokphand vs. PT Indofood Sukses | Charoen Pokphand vs. Semen Indonesia Persero |
| Alumindo Light vs. Asiaplast Industries Tbk | Alumindo Light vs. Argha Karya Prima | Alumindo Light vs. Indal Aluminium Industry | Alumindo Light vs. Alakasa Industrindo Tbk |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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