Correlation Between Charoen Pokphand and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Hisense Home 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 Hisense Home 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 Hisense Home Appliances, you can compare the effects of market volatilities on Charoen Pokphand and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Hisense Home.
Diversification Opportunities for Charoen Pokphand and Hisense Home
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charoen and Hisense is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Hisense Home go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Hisense Home
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 2.42 times less return on investment than Hisense Home. But when comparing it to its historical volatility, Charoen Pokphand Foods is 1.21 times less risky than Hisense Home. It trades about 0.01 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 287.00 in Hisense Home Appliances on September 19, 2024 and sell it today you would earn a total of 2.00 from holding Hisense Home Appliances or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Hisense Home Appliances
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Hisense Home Appliances |
Charoen Pokphand and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Hisense Home
The main advantage of trading using opposite Charoen Pokphand and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
| Hisense Home vs. Superior Plus Corp | Hisense Home vs. SIVERS SEMICONDUCTORS AB | Hisense Home vs. NorAm Drilling AS | Hisense Home vs. Norsk Hydro ASA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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