Correlation Between Charoen Pokphand and Food Life
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Food Life 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 Charoen Pokphand and Food Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charoen Pokphand Foods and Food Life Companies, you can compare the effects of market volatilities on Charoen Pokphand and Food Life 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 Charoen Pokphand with a short position of Food Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Food Life.
Diversification Opportunities for Charoen Pokphand and Food Life
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charoen and Food is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies and Charoen Pokphand 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 Charoen Pokphand Foods are associated (or correlated) with Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Food Life go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Food Life
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 27.5 times less return on investment than Food Life. But when comparing it to its historical volatility, Charoen Pokphand Foods is 1.26 times less risky than Food Life. It trades about 0.02 of its potential returns per unit of risk. Food Life Companies is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,020 in Food Life Companies on November 27, 2024 and sell it today you would earn a total of 680.00 from holding Food Life Companies or generate 33.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Food Life Companies
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Food Life Companies |
Charoen Pokphand and Food Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Food Life
The main advantage of trading using opposite Charoen Pokphand and Food Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Food Life 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 Food Life will offset losses from the drop in Food Life's long position.| Charoen Pokphand vs. Dalata Hotel Group | Charoen Pokphand vs. Algonquin Power Utilities | Charoen Pokphand vs. Emperor Entertainment Hotel | Charoen Pokphand vs. DALATA HOTEL |
| Food Life vs. Insurance Australia Group | Food Life vs. Japan Post Insurance | Food Life vs. Urban Outfitters | Food Life vs. ADRIATIC METALS LS 013355 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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