Correlation Between Charoen Pokphand and Orient Semiconductor

Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Orient Semiconductor 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 Orient Semiconductor 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 Orient Semiconductor Electronics, you can compare the effects of market volatilities on Charoen Pokphand and Orient Semiconductor 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 Orient Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Orient Semiconductor.

Diversification Opportunities for Charoen Pokphand and Orient Semiconductor

0.4

Correlation Coefficient

Charoen Pokphand  Orient Semiconductor

Very weak diversification

The 3 months correlation between Charoen and Orient is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Orient Semiconductor Electroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Semiconductor 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 Orient Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Semiconductor has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Orient Semiconductor go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Orient Semiconductor

Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 4.22 times less return on investment than Orient Semiconductor. But when comparing it to its historical volatility, Charoen Pokphand Enterprise is 2.54 times less risky than Orient Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Orient Semiconductor Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,810  in Orient Semiconductor Electronics on October 21, 2024 and sell it today you would earn a total of  1,435  from holding Orient Semiconductor Electronics or generate 79.28% return on investment over 90 days.

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

Charoen Pokphand Enterprise  vs.  Orient Semiconductor Electroni

Charoen Pokphand Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charoen Pokphand Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Charoen Pokphand is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Orient Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Semiconductor Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Charoen Pokphand and Orient Semiconductor

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

The idea behind Charoen Pokphand Enterprise and Orient Semiconductor Electronics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.