Correlation Between Charoen Pokphand and Silicon Integrated

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

Diversification Opportunities for Charoen Pokphand and Silicon Integrated

0.15

Correlation Coefficient

Charoen Pokphand  Silicon Integrated

Average diversification

The 3 months correlation between Charoen and Silicon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Silicon Integrated Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Integrated 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 Silicon Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Integrated has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Silicon Integrated go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Silicon Integrated

Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 9.87 times less return on investment than Silicon Integrated. But when comparing it to its historical volatility, Charoen Pokphand Enterprise is 3.74 times less risky than Silicon Integrated. It trades about 0.03 of its potential returns per unit of risk. Silicon Integrated Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,650  in Silicon Integrated Systems on October 4, 2024 and sell it today you would earn a total of  5,340  from holding Silicon Integrated Systems or generate 323.64% return on investment over 90 days.

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

Charoen Pokphand Enterprise  vs.  Silicon Integrated Systems

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.

Silicon Integrated

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Charoen Pokphand and Silicon Integrated

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

The idea behind Charoen Pokphand Enterprise and Silicon Integrated Systems 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.