Correlation Between Electricity Generating and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Electricity Generating and Charoen Pokphand 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 Electricity Generating and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electricity Generating Public and Charoen Pokphand Foods, you can compare the effects of market volatilities on Electricity Generating and Charoen Pokphand 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 Electricity Generating with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electricity Generating and Charoen Pokphand.
Diversification Opportunities for Electricity Generating and Charoen Pokphand
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electricity and Charoen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Electricity Generating Public and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and Electricity Generating 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 Electricity Generating Public are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Foods has no effect on the direction of Electricity Generating i.e., Electricity Generating and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Electricity Generating and Charoen Pokphand
Assuming the 90 days trading horizon Electricity Generating Public is expected to generate 1.17 times more return on investment than Charoen Pokphand. However, Electricity Generating is 1.17 times more volatile than Charoen Pokphand Foods. It trades about -0.02 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.11 per unit of risk. If you would invest 12,000 in Electricity Generating Public on August 29, 2024 and sell it today you would lose (100.00) from holding Electricity Generating Public or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electricity Generating Public vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Electricity Generating |
| Charoen Pokphand Foods |
Electricity Generating and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electricity Generating and Charoen Pokphand
The main advantage of trading using opposite Electricity Generating and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electricity Generating position performs unexpectedly, Charoen Pokphand 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 Charoen Pokphand will offset losses from the drop in Charoen Pokphand's long position.| Electricity Generating vs. The Siam Cement | Electricity Generating vs. CP ALL Public | Electricity Generating vs. Intouch Holdings Public | Electricity Generating vs. PTT Public |
| Charoen Pokphand vs. CP ALL Public | Charoen Pokphand vs. The Siam Cement | Charoen Pokphand vs. OSOTSPA PCL NVDR | Charoen Pokphand vs. The Siam Commercial |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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