Correlation Between Sri Trang and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Sri Trang 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 Sri Trang and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sri Trang Gloves and Charoen Pokphand Foods, you can compare the effects of market volatilities on Sri Trang 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 Sri Trang with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Trang and Charoen Pokphand.
Diversification Opportunities for Sri Trang and Charoen Pokphand
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sri and Charoen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sri Trang Gloves 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 Sri Trang 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 Sri Trang Gloves 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 Sri Trang i.e., Sri Trang and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Sri Trang and Charoen Pokphand
Assuming the 90 days trading horizon Sri Trang Gloves is expected to under-perform the Charoen Pokphand. In addition to that, Sri Trang is 2.5 times more volatile than Charoen Pokphand Foods. It trades about -0.13 of its total potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.03 per unit of volatility. If you would invest 2,470 in Charoen Pokphand Foods on August 28, 2024 and sell it today you would lose (20.00) from holding Charoen Pokphand Foods or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sri Trang Gloves vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Sri Trang Gloves |
| Charoen Pokphand Foods |
Sri Trang and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Trang and Charoen Pokphand
The main advantage of trading using opposite Sri Trang and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Trang 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.| Sri Trang vs. NCL International Logistics | Sri Trang vs. The Erawan Group | Sri Trang vs. Airports of Thailand | Sri Trang vs. Eastern Technical Engineering |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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