Correlation Between Mowi ASA and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Mowi ASA 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 Mowi ASA and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mowi ASA and Charoen Pokphand Foods, you can compare the effects of market volatilities on Mowi ASA 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 Mowi ASA with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mowi ASA and Charoen Pokphand.
Diversification Opportunities for Mowi ASA and Charoen Pokphand
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mowi and Charoen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA 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 Mowi ASA 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 Mowi ASA 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 Mowi ASA i.e., Mowi ASA and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Mowi ASA and Charoen Pokphand
Assuming the 90 days horizon Mowi ASA is expected to generate 0.65 times more return on investment than Charoen Pokphand. However, Mowi ASA is 1.54 times less risky than Charoen Pokphand. It trades about -0.22 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.18 per unit of risk. If you would invest 1,748 in Mowi ASA on September 24, 2024 and sell it today you would lose (104.00) from holding Mowi ASA or give up 5.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mowi ASA vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Mowi ASA |
| Charoen Pokphand Foods |
Mowi ASA and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mowi ASA and Charoen Pokphand
The main advantage of trading using opposite Mowi ASA and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA 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.| Mowi ASA vs. Archer Daniels Midland | Mowi ASA vs. Tyson Foods | Mowi ASA vs. Wilmar International Limited | Mowi ASA vs. MOWI ASA SPADR |
| Charoen Pokphand vs. Archer Daniels Midland | Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Wilmar International Limited | Charoen Pokphand vs. MOWI ASA SPADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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