Correlation Between ITALIAN WINE and PT Charoen
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and PT Charoen Pokphand, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and PT Charoen.
Diversification Opportunities for ITALIAN WINE and PT Charoen
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ITALIAN and 0CP1 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS 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 ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and PT Charoen go up and down completely randomly.
Pair Corralation between ITALIAN WINE and PT Charoen
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the PT Charoen. But the stock apears to be less risky and, when comparing its historical volatility, ITALIAN WINE BRANDS is 1.55 times less risky than PT Charoen. The stock trades about -0.01 of its potential returns per unit of risk. The PT Charoen Pokphand is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 34.00 in PT Charoen Pokphand on September 26, 2024 and sell it today you would lose (7.00) from holding PT Charoen Pokphand or give up 20.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. PT Charoen Pokphand
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| PT Charoen Pokphand |
ITALIAN WINE and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and PT Charoen
The main advantage of trading using opposite ITALIAN WINE and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Diageo plc | ITALIAN WINE vs. Pernod Ricard SA | ITALIAN WINE vs. Hawesko Holding AG | ITALIAN WINE vs. ANDREW PELLER LTD |
| PT Charoen vs. Archer Daniels Midland | PT Charoen vs. Tyson Foods | PT Charoen vs. MOWI ASA SPADR | PT Charoen vs. Mowi ASA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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