Correlation Between Visa and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Charoen Pokphand Foods, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Charoen Pokphand.
Diversification Opportunities for Visa and Charoen Pokphand
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Charoen is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Visa and Charoen Pokphand
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.18 times more return on investment than Charoen Pokphand. However, Visa is 1.18 times more volatile than Charoen Pokphand Foods. It trades about 0.36 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.03 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Visa Class A |
| Charoen Pokphand Foods |
Visa and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Charoen Pokphand
The main advantage of trading using opposite Visa and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Charoen Pokphand vs. CP ALL Public | Charoen Pokphand vs. PTT Public | Charoen Pokphand vs. Bangkok Bank Public | Charoen Pokphand vs. SCB X 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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