Correlation Between RB Food and CK Power
Can any of the company-specific risk be diversified away by investing in both RB Food and CK Power 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 RB Food and CK Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Food Supply and CK Power Public, you can compare the effects of market volatilities on RB Food and CK Power 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 RB Food with a short position of CK Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and CK Power.
Diversification Opportunities for RB Food and CK Power
Good diversification
The 3 months correlation between RBF and CKP-R is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and CK Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Power Public and RB Food 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 RB Food Supply are associated (or correlated) with CK Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Power Public has no effect on the direction of RB Food i.e., RB Food and CK Power go up and down completely randomly.
Pair Corralation between RB Food and CK Power
Assuming the 90 days trading horizon RB Food Supply is expected to generate 32.96 times more return on investment than CK Power. However, RB Food is 32.96 times more volatile than CK Power Public. It trades about 0.05 of its potential returns per unit of risk. CK Power Public is currently generating about 0.0 per unit of risk. If you would invest 1,318 in RB Food Supply on September 14, 2024 and sell it today you would lose (658.00) from holding RB Food Supply or give up 49.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Food Supply vs. CK Power Public
Performance |
| Timeline |
| RB Food Supply |
| CK Power Public |
RB Food and CK Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Food and CK Power
The main advantage of trading using opposite RB Food and CK Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Food position performs unexpectedly, CK Power 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 CK Power will offset losses from the drop in CK Power's long position.| RB Food vs. Osotspa Public | RB Food vs. Thai Union Group | RB Food vs. Carabao Group Public | RB Food vs. PTG Energy PCL |
| CK Power vs. Charoen Pokphand Foods | CK Power vs. Bank of Ayudhya | CK Power vs. Taokaenoi Food Marketing | CK Power vs. Surapon Foods 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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