Correlation Between Charoen Pokphand and FRESENIUS SECO
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and FRESENIUS SECO 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 FRESENIUS SECO 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 FRESENIUS SECO ADR, you can compare the effects of market volatilities on Charoen Pokphand and FRESENIUS SECO 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 FRESENIUS SECO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and FRESENIUS SECO.
Diversification Opportunities for Charoen Pokphand and FRESENIUS SECO
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charoen and FRESENIUS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and FRESENIUS SECO ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRESENIUS SECO ADR 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 FRESENIUS SECO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRESENIUS SECO ADR has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and FRESENIUS SECO go up and down completely randomly.
Pair Corralation between Charoen Pokphand and FRESENIUS SECO
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 0.66 times more return on investment than FRESENIUS SECO. However, Charoen Pokphand Foods is 1.51 times less risky than FRESENIUS SECO. It trades about -0.06 of its potential returns per unit of risk. FRESENIUS SECO ADR is currently generating about -0.06 per unit of risk. If you would invest 65.00 in Charoen Pokphand Foods on September 3, 2024 and sell it today you would lose (1.00) from holding Charoen Pokphand Foods or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. FRESENIUS SECO ADR
Performance |
| Timeline |
| Charoen Pokphand Foods |
| FRESENIUS SECO ADR |
Charoen Pokphand and FRESENIUS SECO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and FRESENIUS SECO
The main advantage of trading using opposite Charoen Pokphand and FRESENIUS SECO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, FRESENIUS SECO 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 FRESENIUS SECO will offset losses from the drop in FRESENIUS SECO's long position.| Charoen Pokphand vs. Archer Daniels Midland | Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Wilmar International Limited | Charoen Pokphand vs. SalMar ASA |
| FRESENIUS SECO vs. Superior Plus Corp | FRESENIUS SECO vs. NMI Holdings | FRESENIUS SECO vs. Origin Agritech | FRESENIUS SECO vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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