Correlation Between Charoen Pokphand and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Charoen Pokphand and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Insurance Australia.
Diversification Opportunities for Charoen Pokphand and Insurance Australia
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charoen and Insurance is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Insurance Australia go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Insurance Australia
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.01 times less return on investment than Insurance Australia. In addition to that, Charoen Pokphand is 1.87 times more volatile than Insurance Australia Group. It trades about 0.05 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.1 per unit of volatility. If you would invest 320.00 in Insurance Australia Group on September 15, 2024 and sell it today you would earn a total of 178.00 from holding Insurance Australia Group or generate 55.63% 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. Insurance Australia Group
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Insurance Australia |
Charoen Pokphand and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Insurance Australia
The main advantage of trading using opposite Charoen Pokphand and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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