Correlation Between Charoen Pokphand and Bakrie Sumatera
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Bakrie Sumatera 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 Bakrie Sumatera 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 Bakrie Sumatera Plantations, you can compare the effects of market volatilities on Charoen Pokphand and Bakrie Sumatera 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 Bakrie Sumatera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Bakrie Sumatera.
Diversification Opportunities for Charoen Pokphand and Bakrie Sumatera
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charoen and Bakrie is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Bakrie Sumatera Plantations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrie Sumatera Plan 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 Bakrie Sumatera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrie Sumatera Plan has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Bakrie Sumatera go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Bakrie Sumatera
Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Bakrie Sumatera. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.59 times less risky than Bakrie Sumatera. The stock trades about -0.05 of its potential returns per unit of risk. The Bakrie Sumatera Plantations is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 8,700 in Bakrie Sumatera Plantations on August 26, 2024 and sell it today you would earn a total of 4,000 from holding Bakrie Sumatera Plantations or generate 45.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Indonesia vs. Bakrie Sumatera Plantations
Performance |
| Timeline |
| Charoen Pokphand Ind |
| Bakrie Sumatera Plan |
Charoen Pokphand and Bakrie Sumatera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Bakrie Sumatera
The main advantage of trading using opposite Charoen Pokphand and Bakrie Sumatera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Bakrie Sumatera 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 Bakrie Sumatera will offset losses from the drop in Bakrie Sumatera's long position.| Charoen Pokphand vs. Kalbe Farma Tbk | Charoen Pokphand vs. Indofood Cbp Sukses | Charoen Pokphand vs. Akr Corporindo Tbk |
| Bakrie Sumatera vs. Charoen Pokphand Indonesia | Bakrie Sumatera vs. Kalbe Farma Tbk | Bakrie Sumatera vs. Indofood Cbp Sukses | Bakrie Sumatera vs. Akr Corporindo Tbk |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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