Correlation Between Charoen Pokphand and Multi Bintang
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Multi Bintang 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 Multi Bintang 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 Multi Bintang Indonesia, you can compare the effects of market volatilities on Charoen Pokphand and Multi Bintang 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 Multi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Multi Bintang.
Diversification Opportunities for Charoen Pokphand and Multi Bintang
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charoen and Multi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Multi Bintang Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Bintang Indonesia 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 Multi Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Bintang Indonesia has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Multi Bintang go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Multi Bintang
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Multi Bintang. In addition to that, Charoen Pokphand is 2.98 times more volatile than Multi Bintang Indonesia. It trades about -0.15 of its total potential returns per unit of risk. Multi Bintang Indonesia is currently generating about -0.1 per unit of volatility. If you would invest 640,708 in Multi Bintang Indonesia on August 28, 2024 and sell it today you would lose (10,708) from holding Multi Bintang Indonesia or give up 1.67% 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. Multi Bintang Indonesia
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Multi Bintang Indonesia |
Charoen Pokphand and Multi Bintang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Multi Bintang
The main advantage of trading using opposite Charoen Pokphand and Multi Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Multi Bintang 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 Multi Bintang will offset losses from the drop in Multi Bintang'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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