Correlation Between Charoen Pokphand and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and GigaMedia 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 GigaMedia 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 GigaMedia, you can compare the effects of market volatilities on Charoen Pokphand and GigaMedia 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 GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and GigaMedia.
Diversification Opportunities for Charoen Pokphand and GigaMedia
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charoen and GigaMedia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and GigaMedia go up and down completely randomly.
Pair Corralation between Charoen Pokphand and GigaMedia
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.4 times less return on investment than GigaMedia. In addition to that, Charoen Pokphand is 1.92 times more volatile than GigaMedia. It trades about 0.01 of its total potential returns per unit of risk. GigaMedia is currently generating about 0.03 per unit of volatility. If you would invest 115.00 in GigaMedia on October 7, 2024 and sell it today you would earn a total of 24.00 from holding GigaMedia or generate 20.87% 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. GigaMedia
Performance |
| Timeline |
| Charoen Pokphand Foods |
| GigaMedia |
Charoen Pokphand and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and GigaMedia
The main advantage of trading using opposite Charoen Pokphand and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Charoen Pokphand vs. Delta Air Lines | Charoen Pokphand vs. YATRA ONLINE DL 0001 | Charoen Pokphand vs. RYANAIR HLDGS ADR | Charoen Pokphand vs. Altair Engineering |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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