Correlation Between Charoen Pokphand and Indorama Synthetics
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Indorama Synthetics 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 Indorama Synthetics 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 Indorama Synthetics Tbk, you can compare the effects of market volatilities on Charoen Pokphand and Indorama Synthetics 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 Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Indorama Synthetics.
Diversification Opportunities for Charoen Pokphand and Indorama Synthetics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charoen and Indorama is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics Tbk 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 Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Indorama Synthetics go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Indorama Synthetics
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to generate 0.77 times more return on investment than Indorama Synthetics. However, Charoen Pokphand Indonesia is 1.29 times less risky than Indorama Synthetics. It trades about -0.02 of its potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.12 per unit of risk. If you would invest 485,000 in Charoen Pokphand Indonesia on September 2, 2024 and sell it today you would lose (16,000) from holding Charoen Pokphand Indonesia or give up 3.3% 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. Indorama Synthetics Tbk
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Indorama Synthetics Tbk |
Charoen Pokphand and Indorama Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Indorama Synthetics
The main advantage of trading using opposite Charoen Pokphand and Indorama Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Indorama Synthetics 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 Indorama Synthetics will offset losses from the drop in Indorama Synthetics' long position.| Charoen Pokphand vs. Bank BRISyariah Tbk | Charoen Pokphand vs. Mitra Pinasthika Mustika | Charoen Pokphand vs. Jakarta Int Hotels | Charoen Pokphand vs. Indosterling Technomedia Tbk |
| Indorama Synthetics vs. Japfa Comfeed Indonesia | Indorama Synthetics vs. Charoen Pokphand Indonesia | Indorama Synthetics vs. Erajaya Swasembada Tbk | Indorama Synthetics 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |