Correlation Between Charoen Pokphand and BP Plc
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and BP Plc 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 BP Plc 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 BP plc, you can compare the effects of market volatilities on Charoen Pokphand and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and BP Plc.
Diversification Opportunities for Charoen Pokphand and BP Plc
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charoen and BPE5 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and BP Plc go up and down completely randomly.
Pair Corralation between Charoen Pokphand and BP Plc
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.79 times more return on investment than BP Plc. However, Charoen Pokphand is 1.79 times more volatile than BP plc. It trades about 0.08 of its potential returns per unit of risk. BP plc is currently generating about -0.04 per unit of risk. If you would invest 53.00 in Charoen Pokphand Foods on September 15, 2024 and sell it today you would earn a total of 13.00 from holding Charoen Pokphand Foods or generate 24.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. BP plc
Performance |
| Timeline |
| Charoen Pokphand Foods |
| BP plc |
Charoen Pokphand and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and BP Plc
The main advantage of trading using opposite Charoen Pokphand and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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