Correlation Between Charoen Pokphand and First American
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and First American 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 First American 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 First American Financial, you can compare the effects of market volatilities on Charoen Pokphand and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and First American.
Diversification Opportunities for Charoen Pokphand and First American
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charoen and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and First American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Financial 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Financial has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and First American go up and down completely randomly.
Pair Corralation between Charoen Pokphand and First American
Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.46 times less return on investment than First American. In addition to that, Charoen Pokphand is 1.75 times more volatile than First American Financial. It trades about 0.01 of its total potential returns per unit of risk. First American Financial is currently generating about 0.02 per unit of volatility. If you would invest 5,658 in First American Financial on December 10, 2024 and sell it today you would earn a total of 142.00 from holding First American Financial or generate 2.51% 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. First American Financial
Performance |
| Timeline |
| Charoen Pokphand Foods |
| First American Financial |
Charoen Pokphand and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and First American
The main advantage of trading using opposite Charoen Pokphand and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Charoen Pokphand vs. RYU Apparel | Charoen Pokphand vs. Sekisui Chemical Co | Charoen Pokphand vs. INDO RAMA SYNTHETIC | Charoen Pokphand vs. G III Apparel Group |
| First American vs. MEDCAW INVESTMENTS LS 01 | First American vs. United Utilities Group | First American vs. New Residential Investment | First American vs. Gladstone Investment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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