Correlation Between Charoen Pokphand and China Petroleum
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and China Petroleum 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 China Petroleum 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 China Petroleum Chemical, you can compare the effects of market volatilities on Charoen Pokphand and China Petroleum 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 China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and China Petroleum.
Diversification Opportunities for Charoen Pokphand and China Petroleum
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and China is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical 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 China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and China Petroleum go up and down completely randomly.
Pair Corralation between Charoen Pokphand and China Petroleum
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.94 times less return on investment than China Petroleum. In addition to that, Charoen Pokphand is 1.26 times more volatile than China Petroleum Chemical. It trades about 0.04 of its total potential returns per unit of risk. China Petroleum Chemical is currently generating about 0.1 per unit of volatility. If you would invest 51.00 in China Petroleum Chemical on September 14, 2024 and sell it today you would earn a total of 2.00 from holding China Petroleum Chemical or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. China Petroleum Chemical
Performance |
| Timeline |
| Charoen Pokphand Foods |
| China Petroleum Chemical |
Charoen Pokphand and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and China Petroleum
The main advantage of trading using opposite Charoen Pokphand and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.| Charoen Pokphand vs. Alaska Air Group | Charoen Pokphand vs. Westinghouse Air Brake | Charoen Pokphand vs. Wizz Air Holdings | Charoen Pokphand vs. NORWEGIAN AIR SHUT |
| China Petroleum vs. HYATT HOTELS A | China Petroleum vs. Charoen Pokphand Foods | China Petroleum vs. InterContinental Hotels Group | China Petroleum vs. National Beverage 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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