Correlation Between Charoen Pokphand and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and SalMar ASA 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 SalMar ASA 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 SalMar ASA, you can compare the effects of market volatilities on Charoen Pokphand and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and SalMar ASA.
Diversification Opportunities for Charoen Pokphand and SalMar ASA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charoen and SalMar is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and SalMar ASA go up and down completely randomly.
Pair Corralation between Charoen Pokphand and SalMar ASA
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.06 times more return on investment than SalMar ASA. However, Charoen Pokphand is 1.06 times more volatile than SalMar ASA. It trades about 0.06 of its potential returns per unit of risk. SalMar ASA is currently generating about -0.07 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. SalMar ASA
Performance |
| Timeline |
| Charoen Pokphand Foods |
| SalMar ASA |
Charoen Pokphand and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and SalMar ASA
The main advantage of trading using opposite Charoen Pokphand and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA'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 |
| SalMar ASA vs. Salesforce | SalMar ASA vs. Insteel Industries | SalMar ASA vs. Lamar Advertising | SalMar ASA vs. MUTUIONLINE |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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