Correlation Between Charoen Pokphand and Sumber Alfaria
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Sumber Alfaria 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 Sumber Alfaria 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 Sumber Alfaria Trijaya, you can compare the effects of market volatilities on Charoen Pokphand and Sumber Alfaria 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 Sumber Alfaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Sumber Alfaria.
Diversification Opportunities for Charoen Pokphand and Sumber Alfaria
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charoen and Sumber is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Sumber Alfaria Trijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Alfaria Trijaya 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 Sumber Alfaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Alfaria Trijaya has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Sumber Alfaria go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Sumber Alfaria
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Sumber Alfaria. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.17 times less risky than Sumber Alfaria. The stock trades about -0.05 of its potential returns per unit of risk. The Sumber Alfaria Trijaya is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 285,000 in Sumber Alfaria Trijaya on August 29, 2024 and sell it today you would earn a total of 6,000 from holding Sumber Alfaria Trijaya or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Indonesia vs. Sumber Alfaria Trijaya
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Sumber Alfaria Trijaya |
Charoen Pokphand and Sumber Alfaria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Sumber Alfaria
The main advantage of trading using opposite Charoen Pokphand and Sumber Alfaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Sumber Alfaria 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 Sumber Alfaria will offset losses from the drop in Sumber Alfaria'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 |
| Sumber Alfaria vs. Elang Mahkota Teknologi | Sumber Alfaria vs. Ace Hardware Indonesia | Sumber Alfaria vs. BFI Finance Indonesia | Sumber Alfaria vs. Tower Bersama Infrastructure |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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