Correlation Between Charoen Pokphand and Pabrik Kertas
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Pabrik Kertas 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 Pabrik Kertas 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 Pabrik Kertas Tjiwi, you can compare the effects of market volatilities on Charoen Pokphand and Pabrik Kertas 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 Pabrik Kertas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Pabrik Kertas.
Diversification Opportunities for Charoen Pokphand and Pabrik Kertas
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charoen and Pabrik is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Pabrik Kertas Tjiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pabrik Kertas Tjiwi 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 Pabrik Kertas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pabrik Kertas Tjiwi has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Pabrik Kertas go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Pabrik Kertas
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Pabrik Kertas. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.22 times less risky than Pabrik Kertas. The stock trades about -0.01 of its potential returns per unit of risk. The Pabrik Kertas Tjiwi is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 727,187 in Pabrik Kertas Tjiwi on August 27, 2024 and sell it today you would lose (104,687) from holding Pabrik Kertas Tjiwi or give up 14.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.77% |
| Values | Daily Returns |
Charoen Pokphand Indonesia vs. Pabrik Kertas Tjiwi
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Pabrik Kertas Tjiwi |
Charoen Pokphand and Pabrik Kertas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Pabrik Kertas
The main advantage of trading using opposite Charoen Pokphand and Pabrik Kertas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Pabrik Kertas 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 Pabrik Kertas will offset losses from the drop in Pabrik Kertas' 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 |
| Pabrik Kertas vs. Indah Kiat Pulp | Pabrik Kertas vs. Indocement Tunggal Prakarsa | Pabrik Kertas vs. Barito Pacific Tbk | Pabrik Kertas vs. Charoen Pokphand Indonesia |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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