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 SPADR 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
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOWI and Charoen is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MOWI ASA SPADR 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 SPADR 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 trading horizon MOWI ASA is expected to generate 1.23 times less return on investment than Charoen Pokphand. But when comparing it to its historical volatility, MOWI ASA SPADR is 1.55 times less risky than Charoen Pokphand. It trades about 0.03 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Charoen Pokphand Foods on October 12, 2024 and sell it today you would earn a total of 8.00 from holding Charoen Pokphand Foods or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOWI ASA SPADR vs. Charoen Pokphand Foods
Performance |
| Timeline |
| MOWI ASA SPADR |
| 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. CHRYSALIS INVESTMENTS LTD | MOWI ASA vs. New Residential Investment | MOWI ASA vs. Acadia Healthcare | MOWI ASA vs. Urban Outfitters |
| Charoen Pokphand vs. Charoen Pokphand Foods | Charoen Pokphand vs. KRUNG THAI FGN | Charoen Pokphand vs. PT Gudang Garam | Charoen Pokphand vs. TMBThanachart Bank Public |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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