Correlation Between Charoen Pokphand and Catcher Technology

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

Diversification Opportunities for Charoen Pokphand and Catcher Technology

0.23

Correlation Coefficient

Charoen Pokphand  Catcher Technology

Modest diversification

The 3 months correlation between Charoen and Catcher is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology 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 Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Catcher Technology go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Catcher Technology

Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to under-perform the Catcher Technology. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Enterprise is 1.18 times less risky than Catcher Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Catcher Technology Co is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  18,000  in Catcher Technology Co on October 21, 2024 and sell it today you would earn a total of  1,950  from holding Catcher Technology Co or generate 10.83% return on investment over 90 days.

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

Charoen Pokphand Enterprise  vs.  Catcher Technology Co

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.

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology Co 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 Catcher Technology

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

The idea behind Charoen Pokphand Enterprise and Catcher Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.