Correlation Between Norwegian Air and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Charoen Pokphand 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 Norwegian Air and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Air Shuttle and Charoen Pokphand Foods, you can compare the effects of market volatilities on Norwegian Air and Charoen Pokphand 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 Norwegian Air with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Charoen Pokphand.
Diversification Opportunities for Norwegian Air and Charoen Pokphand
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norwegian and Charoen is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Foods has no effect on the direction of Norwegian Air i.e., Norwegian Air and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Norwegian Air and Charoen Pokphand
Assuming the 90 days horizon Norwegian Air Shuttle is expected to under-perform the Charoen Pokphand. In addition to that, Norwegian Air is 1.34 times more volatile than Charoen Pokphand Foods. It trades about -0.04 of its total potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.06 per unit of volatility. If you would invest 56.00 in Charoen Pokphand Foods on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Charoen Pokphand Foods or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Charoen Pokphand Foods |
Norwegian Air and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Charoen Pokphand
The main advantage of trading using opposite Norwegian Air and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Charoen Pokphand 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 Charoen Pokphand will offset losses from the drop in Charoen Pokphand's long position.| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. NMI Holdings | Norwegian Air vs. SIVERS SEMICONDUCTORS AB |
| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp | Charoen Pokphand vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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