Correlation Between Lerøy Seafood and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood 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 Lerøy Seafood and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and Charoen Pokphand Foods, you can compare the effects of market volatilities on Lerøy Seafood 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 Lerøy Seafood with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and Charoen Pokphand.
Diversification Opportunities for Lerøy Seafood and Charoen Pokphand
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lerøy and Charoen is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group 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 Lerøy Seafood 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 Lery Seafood Group 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 Lerøy Seafood i.e., Lerøy Seafood and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Lerøy Seafood and Charoen Pokphand
Assuming the 90 days horizon Lery Seafood Group is expected to generate 2.78 times more return on investment than Charoen Pokphand. However, Lerøy Seafood is 2.78 times more volatile than Charoen Pokphand Foods. It trades about 0.06 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.02 per unit of risk. If you would invest 92.00 in Lery Seafood Group on September 14, 2024 and sell it today you would earn a total of 342.00 from holding Lery Seafood Group or generate 371.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lery Seafood Group vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Lery Seafood Group |
| Charoen Pokphand Foods |
Lerøy Seafood and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lerøy Seafood and Charoen Pokphand
The main advantage of trading using opposite Lerøy Seafood and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood 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.| Lerøy Seafood vs. Hormel Foods | Lerøy Seafood vs. Superior Plus Corp | Lerøy Seafood vs. SIVERS SEMICONDUCTORS AB | Lerøy Seafood vs. NorAm Drilling AS |
| Charoen Pokphand vs. Alaska Air Group | Charoen Pokphand vs. Westinghouse Air Brake | Charoen Pokphand vs. Wizz Air Holdings | Charoen Pokphand vs. NORWEGIAN AIR SHUT |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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