Correlation Between Charoen Pokphand and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance, you can compare the effects of market volatilities on Charoen Pokphand and Singapore Reinsurance 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 Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Singapore Reinsurance.
Diversification Opportunities for Charoen Pokphand and Singapore Reinsurance
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and Singapore is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Singapore Reinsurance
Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.41 times more return on investment than Singapore Reinsurance. However, Charoen Pokphand is 1.41 times more volatile than Singapore Reinsurance. It trades about 0.05 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.06 per unit of risk. If you would invest 47.00 in Charoen Pokphand Foods on September 15, 2024 and sell it today you would earn a total of 19.00 from holding Charoen Pokphand Foods or generate 40.43% 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. Singapore Reinsurance
Performance |
| Timeline |
| Charoen Pokphand Foods |
| Singapore Reinsurance |
Charoen Pokphand and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Singapore Reinsurance
The main advantage of trading using opposite Charoen Pokphand and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Singapore Reinsurance 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance's long position.| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
| Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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