Correlation Between Charoen Pokphand and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Wilmar International 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 Wilmar International 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 Wilmar International Limited, you can compare the effects of market volatilities on Charoen Pokphand and Wilmar International 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 Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Wilmar International.
Diversification Opportunities for Charoen Pokphand and Wilmar International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charoen and Wilmar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Wilmar International go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Wilmar International
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.33 times more return on investment than Wilmar International. However, Charoen Pokphand is 1.33 times more volatile than Wilmar International Limited. It trades about 0.06 of its potential returns per unit of risk. Wilmar International Limited is currently generating about -0.01 per unit of risk. If you would invest 48.00 in Charoen Pokphand Foods on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Charoen Pokphand Foods or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Wilmar International Limited
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Wilmar International |
Charoen Pokphand and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Wilmar International
The main advantage of trading using opposite Charoen Pokphand and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Wilmar International 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 Wilmar International will offset losses from the drop in Wilmar International's long position.| Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp | Charoen Pokphand vs. NMI Holdings | Charoen Pokphand vs. Origin Agritech |
| Wilmar International vs. Wayside Technology Group | Wilmar International vs. Computer And Technologies | Wilmar International vs. AECOM TECHNOLOGY | Wilmar International vs. GUARDANT HEALTH CL |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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