Correlation Between Charoen Pokphand and PT Charoen
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and PT Charoen 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 PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charoen Pokphand Foods and PT Charoen Pokphand, you can compare the effects of market volatilities on Charoen Pokphand and PT Charoen 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 PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and PT Charoen.
Diversification Opportunities for Charoen Pokphand and PT Charoen
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charoen and 0CP1 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and PT Charoen Pokphand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charoen Pokphand 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 Foods are associated (or correlated) with PT Charoen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charoen Pokphand has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and PT Charoen go up and down completely randomly.
Pair Corralation between Charoen Pokphand and PT Charoen
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 0.77 times more return on investment than PT Charoen. However, Charoen Pokphand Foods is 1.29 times less risky than PT Charoen. It trades about 0.06 of its potential returns per unit of risk. PT Charoen Pokphand is currently generating about -0.02 per unit of risk. If you would invest 50.00 in Charoen Pokphand Foods on September 24, 2024 and sell it today you would earn a total of 10.00 from holding Charoen Pokphand Foods or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. PT Charoen Pokphand
Performance |
| Timeline |
| Charoen Pokphand Foods |
| PT Charoen Pokphand |
Charoen Pokphand and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and PT Charoen
The main advantage of trading using opposite Charoen Pokphand and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, PT Charoen 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 PT Charoen will offset losses from the drop in PT Charoen's long position.| Charoen Pokphand vs. Archer Daniels Midland | Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Wilmar International Limited | Charoen Pokphand vs. MOWI ASA SPADR |
| PT Charoen vs. Archer Daniels Midland | PT Charoen vs. Tyson Foods | PT Charoen vs. Wilmar International Limited | PT Charoen vs. MOWI ASA SPADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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