Correlation Between ETFS Coffee and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee 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 ETFS Coffee and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Coffee ETC and Charoen Pokphand Foods, you can compare the effects of market volatilities on ETFS Coffee 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 ETFS Coffee with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Charoen Pokphand.
Diversification Opportunities for ETFS Coffee and Charoen Pokphand
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ETFS and Charoen is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC 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 ETFS Coffee 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 ETFS Coffee ETC 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 ETFS Coffee i.e., ETFS Coffee and Charoen Pokphand go up and down completely randomly.
Pair Corralation between ETFS Coffee and Charoen Pokphand
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.72 times more return on investment than Charoen Pokphand. However, ETFS Coffee ETC is 1.39 times less risky than Charoen Pokphand. It trades about 0.13 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.05 per unit of risk. If you would invest 2,553 in ETFS Coffee ETC on August 29, 2024 and sell it today you would earn a total of 2,376 from holding ETFS Coffee ETC or generate 93.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.61% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Charoen Pokphand Foods
Performance |
| Timeline |
| ETFS Coffee ETC |
| Charoen Pokphand Foods |
ETFS Coffee and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Charoen Pokphand
The main advantage of trading using opposite ETFS Coffee and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee 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.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| Charoen Pokphand vs. Penn National Gaming | Charoen Pokphand vs. Games Workshop Group | Charoen Pokphand vs. HOCHSCHILD MINING | Charoen Pokphand vs. ETFS Coffee ETC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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