Correlation Between Qingling Motors and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Qingling Motors 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 Qingling Motors and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qingling Motors Co and Charoen Pokphand Foods, you can compare the effects of market volatilities on Qingling Motors 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 Qingling Motors with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingling Motors and Charoen Pokphand.
Diversification Opportunities for Qingling Motors and Charoen Pokphand
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Qingling and Charoen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Qingling Motors Co 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 Qingling Motors 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 Qingling Motors Co 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 Qingling Motors i.e., Qingling Motors and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Qingling Motors and Charoen Pokphand
Assuming the 90 days horizon Qingling Motors Co is expected to under-perform the Charoen Pokphand. In addition to that, Qingling Motors is 1.53 times more volatile than Charoen Pokphand Foods. It trades about -0.01 of its total potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.02 per unit of volatility. If you would invest 64.00 in Charoen Pokphand Foods on September 14, 2024 and sell it today you would earn a total of 2.00 from holding Charoen Pokphand Foods or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qingling Motors Co vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Qingling Motors |
| Charoen Pokphand Foods |
Qingling Motors and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qingling Motors and Charoen Pokphand
The main advantage of trading using opposite Qingling Motors and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingling Motors 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.| Qingling Motors vs. Charoen Pokphand Foods | Qingling Motors vs. Shenandoah Telecommunications | Qingling Motors vs. National Beverage Corp | Qingling Motors vs. Tyson Foods |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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