Correlation Between Sawit Sumbermas and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Sawit Sumbermas 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 Sawit Sumbermas and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sawit Sumbermas Sarana and Charoen Pokphand Indonesia, you can compare the effects of market volatilities on Sawit Sumbermas 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 Sawit Sumbermas with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sawit Sumbermas and Charoen Pokphand.
Diversification Opportunities for Sawit Sumbermas and Charoen Pokphand
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sawit and Charoen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sawit Sumbermas Sarana and Charoen Pokphand Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Ind and Sawit Sumbermas 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 Sawit Sumbermas Sarana 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 Ind has no effect on the direction of Sawit Sumbermas i.e., Sawit Sumbermas and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Sawit Sumbermas and Charoen Pokphand
Assuming the 90 days trading horizon Sawit Sumbermas Sarana is expected to under-perform the Charoen Pokphand. But the stock apears to be less risky and, when comparing its historical volatility, Sawit Sumbermas Sarana is 1.28 times less risky than Charoen Pokphand. The stock trades about -0.31 of its potential returns per unit of risk. The Charoen Pokphand Indonesia is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 512,500 in Charoen Pokphand Indonesia on August 28, 2024 and sell it today you would lose (40,500) from holding Charoen Pokphand Indonesia or give up 7.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sawit Sumbermas Sarana vs. Charoen Pokphand Indonesia
Performance |
| Timeline |
| Sawit Sumbermas Sarana |
| Charoen Pokphand Ind |
Sawit Sumbermas and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sawit Sumbermas and Charoen Pokphand
The main advantage of trading using opposite Sawit Sumbermas and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sawit Sumbermas 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.| Sawit Sumbermas vs. Surya Citra Media | Sawit Sumbermas vs. Matahari Department Store | Sawit Sumbermas vs. Salim Ivomas Pratama | Sawit Sumbermas vs. Akr Corporindo Tbk |
| Charoen Pokphand vs. Japfa Comfeed Indonesia | Charoen Pokphand vs. Kalbe Farma Tbk | Charoen Pokphand vs. PT Indofood Sukses | Charoen Pokphand vs. Semen Indonesia Persero |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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