Correlation Between Charoen Pokphand and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Benchmark Electronics 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 Benchmark Electronics 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 Benchmark Electronics, you can compare the effects of market volatilities on Charoen Pokphand and Benchmark Electronics 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 Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Benchmark Electronics.
Diversification Opportunities for Charoen Pokphand and Benchmark Electronics
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charoen and Benchmark is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Benchmark Electronics
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.39 times less return on investment than Benchmark Electronics. But when comparing it to its historical volatility, Charoen Pokphand Foods is 1.0 times less risky than Benchmark Electronics. It trades about 0.04 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,653 in Benchmark Electronics on October 13, 2024 and sell it today you would earn a total of 787.00 from holding Benchmark Electronics or generate 21.54% 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. Benchmark Electronics
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Benchmark Electronics |
Charoen Pokphand and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Benchmark Electronics
The main advantage of trading using opposite Charoen Pokphand and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Benchmark Electronics 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| Charoen Pokphand vs. Spirent Communications plc | Charoen Pokphand vs. Ribbon Communications | Charoen Pokphand vs. Forsys Metals Corp | Charoen Pokphand vs. Comba Telecom Systems |
| Benchmark Electronics vs. Tradeweb Markets | Benchmark Electronics vs. TRADEGATE | Benchmark Electronics vs. Jacquet Metal Service | Benchmark Electronics vs. Treasury Wine Estates |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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