Correlation Between Charoen Pokphand and Performance Food
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Charoen Pokphand and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Performance Food.
Diversification Opportunities for Charoen Pokphand and Performance Food
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and Performance is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Performance Food go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Performance Food
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.2 times less return on investment than Performance Food. In addition to that, Charoen Pokphand is 1.77 times more volatile than Performance Food Group. It trades about 0.04 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.08 per unit of volatility. If you would invest 8,150 in Performance Food Group on September 15, 2024 and sell it today you would earn a total of 200.00 from holding Performance Food Group or generate 2.45% 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. Performance Food Group
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Performance Food |
Charoen Pokphand and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Performance Food
The main advantage of trading using opposite Charoen Pokphand and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
| Performance Food vs. NorAm Drilling AS | Performance Food vs. Broadridge Financial Solutions | Performance Food vs. Bumrungrad Hospital Public | Performance Food vs. Broadcom |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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