Correlation Between Charoen Pokphand and Tecom

Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Tecom 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 Charoen Pokphand and Tecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charoen Pokphand Enterprise and Tecom Co, you can compare the effects of market volatilities on Charoen Pokphand and Tecom 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 Charoen Pokphand with a short position of Tecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Tecom.

Diversification Opportunities for Charoen Pokphand and Tecom

-0.26

Correlation Coefficient

Charoen Pokphand  Tecom

Very good diversification

The 3 months correlation between Charoen and Tecom is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Tecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecom and Charoen Pokphand 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 Charoen Pokphand Enterprise are associated (or correlated) with Tecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecom has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Tecom go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Tecom

Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 0.24 times more return on investment than Tecom. However, Charoen Pokphand Enterprise is 4.1 times less risky than Tecom. It trades about 0.24 of its potential returns per unit of risk. Tecom Co is currently generating about 0.02 per unit of risk. If you would invest  9,110  in Charoen Pokphand Enterprise on December 24, 2024 and sell it today you would earn a total of  990.00  from holding Charoen Pokphand Enterprise or generate 10.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Charoen Pokphand Enterprise  vs.  Tecom Co

Charoen Pokphand Ent

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Charoen Pokphand Enterprise are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Charoen Pokphand may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tecom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tecom Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tecom is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Charoen Pokphand and Tecom

The main advantage of trading using opposite Charoen Pokphand and Tecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Tecom 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 Tecom will offset losses from the drop in Tecom's long position.

The idea behind Charoen Pokphand Enterprise and Tecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.