Correlation Between SalMar ASA and PT Charoen
Can any of the company-specific risk be diversified away by investing in both SalMar ASA and PT Charoen 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 SalMar ASA and PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalMar ASA and PT Charoen Pokphand, you can compare the effects of market volatilities on SalMar ASA and PT Charoen 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 SalMar ASA with a short position of PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SalMar ASA and PT Charoen.
Diversification Opportunities for SalMar ASA and PT Charoen
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SalMar and 0CP1 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SalMar ASA and PT Charoen Pokphand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charoen Pokphand and SalMar ASA 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 SalMar ASA are associated (or correlated) with PT Charoen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charoen Pokphand has no effect on the direction of SalMar ASA i.e., SalMar ASA and PT Charoen go up and down completely randomly.
Pair Corralation between SalMar ASA and PT Charoen
Assuming the 90 days horizon SalMar ASA is expected to under-perform the PT Charoen. But the stock apears to be less risky and, when comparing its historical volatility, SalMar ASA is 1.37 times less risky than PT Charoen. The stock trades about -0.07 of its potential returns per unit of risk. The PT Charoen Pokphand is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 30.00 in PT Charoen Pokphand on September 24, 2024 and sell it today you would lose (4.00) from holding PT Charoen Pokphand or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SalMar ASA vs. PT Charoen Pokphand
Performance |
| Timeline |
| SalMar ASA |
| PT Charoen Pokphand |
SalMar ASA and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SalMar ASA and PT Charoen
The main advantage of trading using opposite SalMar ASA and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SalMar ASA position performs unexpectedly, PT Charoen 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 PT Charoen will offset losses from the drop in PT Charoen's long position.| SalMar ASA vs. Salesforce | SalMar ASA vs. Insteel Industries | SalMar ASA vs. Lamar Advertising | SalMar ASA vs. MUTUIONLINE |
| PT Charoen vs. Archer Daniels Midland | PT Charoen vs. Tyson Foods | PT Charoen vs. Wilmar International Limited | PT Charoen vs. MOWI ASA SPADR |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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