Correlation Between Singapore Reinsurance and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Singapore Reinsurance 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 Singapore Reinsurance and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Reinsurance and Charoen Pokphand Foods, you can compare the effects of market volatilities on Singapore Reinsurance 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 Singapore Reinsurance with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Reinsurance and Charoen Pokphand.
Diversification Opportunities for Singapore Reinsurance and Charoen Pokphand
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Singapore and Charoen is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance i.e., Singapore Reinsurance and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Singapore Reinsurance and Charoen Pokphand
Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 2.86 times less return on investment than Charoen Pokphand. But when comparing it to its historical volatility, Singapore Reinsurance is 1.91 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Charoen Pokphand Foods on September 15, 2024 and sell it today you would earn a total of 1.00 from holding Charoen Pokphand Foods or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Reinsurance vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Singapore Reinsurance |
| Charoen Pokphand Foods |
Singapore Reinsurance and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Reinsurance and Charoen Pokphand
The main advantage of trading using opposite Singapore Reinsurance and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Reinsurance 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.| Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc |
| Charoen Pokphand vs. Tyson Foods | Charoen Pokphand vs. Mowi ASA | Charoen Pokphand vs. SalMar ASA | Charoen Pokphand vs. Superior Plus Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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