Correlation Between Minor International and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Minor International 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 Minor International and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minor International Public and Charoen Pokphand Foods, you can compare the effects of market volatilities on Minor International 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 Minor International with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minor International and Charoen Pokphand.
Diversification Opportunities for Minor International and Charoen Pokphand
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Minor and Charoen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Minor International 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 Minor International 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 Minor International 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 Minor International i.e., Minor International and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Minor International and Charoen Pokphand
Assuming the 90 days trading horizon Minor International Public is expected to under-perform the Charoen Pokphand. In addition to that, Minor International is 1.03 times more volatile than Charoen Pokphand Foods. It trades about 0.0 of its total potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.02 per unit of volatility. If you would invest 2,278 in Charoen Pokphand Foods on August 28, 2024 and sell it today you would earn a total of 172.00 from holding Charoen Pokphand Foods or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minor International Public vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Minor International |
| Charoen Pokphand Foods |
Minor International and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minor International and Charoen Pokphand
The main advantage of trading using opposite Minor International and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minor International 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.| Minor International vs. CP ALL Public | Minor International vs. Bangkok Dusit Medical | Minor International vs. Airports of Thailand | Minor International vs. Kasikornbank Public |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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