Correlation Between Charoen Pokphand and Ever Shine
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Ever Shine 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 Ever Shine 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 Ever Shine Textile, you can compare the effects of market volatilities on Charoen Pokphand and Ever Shine 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 Ever Shine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Ever Shine.
Diversification Opportunities for Charoen Pokphand and Ever Shine
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charoen and Ever is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Ever Shine Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Shine Textile 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 Ever Shine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Shine Textile has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Ever Shine go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Ever Shine
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Ever Shine. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.59 times less risky than Ever Shine. The stock trades about -0.23 of its potential returns per unit of risk. The Ever Shine Textile is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,500 in Ever Shine Textile on September 1, 2024 and sell it today you would lose (100.00) from holding Ever Shine Textile or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Indonesia vs. Ever Shine Textile
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Ever Shine Textile |
Charoen Pokphand and Ever Shine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Ever Shine
The main advantage of trading using opposite Charoen Pokphand and Ever Shine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Ever Shine 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 Ever Shine will offset losses from the drop in Ever Shine'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 |
| Ever Shine vs. Japfa Comfeed Indonesia | Ever Shine vs. Charoen Pokphand Indonesia | Ever Shine vs. Erajaya Swasembada Tbk | Ever Shine vs. Indofood Cbp Sukses |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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