Correlation Between Erajaya Swasembada and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada 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 Erajaya Swasembada and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erajaya Swasembada Tbk and Charoen Pokphand Indonesia, you can compare the effects of market volatilities on Erajaya Swasembada 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 Erajaya Swasembada with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Charoen Pokphand.
Diversification Opportunities for Erajaya Swasembada and Charoen Pokphand
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erajaya and Charoen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Charoen Pokphand Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Ind and Erajaya Swasembada 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 Erajaya Swasembada Tbk 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 Ind has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Charoen Pokphand
Assuming the 90 days trading horizon Erajaya Swasembada is expected to generate 1.81 times less return on investment than Charoen Pokphand. In addition to that, Erajaya Swasembada is 1.27 times more volatile than Charoen Pokphand Indonesia. It trades about 0.01 of its total potential returns per unit of risk. Charoen Pokphand Indonesia is currently generating about 0.01 per unit of volatility. If you would invest 456,683 in Charoen Pokphand Indonesia on August 31, 2024 and sell it today you would earn a total of 17,317 from holding Charoen Pokphand Indonesia or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Charoen Pokphand Indonesia
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Charoen Pokphand Ind |
Erajaya Swasembada and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Charoen Pokphand
The main advantage of trading using opposite Erajaya Swasembada and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada 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.| Erajaya Swasembada vs. Multipolar Tbk | Erajaya Swasembada vs. Astra Graphia Tbk | Erajaya Swasembada vs. Matahari Putra Prima | Erajaya Swasembada vs. Ramayana Lestari Sentosa |
| Charoen Pokphand vs. Indofood Cbp Sukses | Charoen Pokphand vs. Bank BRISyariah Tbk | Charoen Pokphand vs. Mitra Pinasthika Mustika | Charoen Pokphand vs. Jakarta Int Hotels |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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