Correlation Between Charoen Pokphand and Trade Van

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

Diversification Opportunities for Charoen Pokphand and Trade Van

0.08

Correlation Coefficient

Charoen Pokphand  Trade Van

Significant diversification

The 3 months correlation between Charoen and Trade is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Trade Van go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Trade Van

Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 0.38 times more return on investment than Trade Van. However, Charoen Pokphand Enterprise is 2.61 times less risky than Trade Van. It trades about 0.23 of its potential returns per unit of risk. Trade Van Information Services is currently generating about 0.03 per unit of risk. If you would invest  9,100  in Charoen Pokphand Enterprise on December 28, 2024 and sell it today you would earn a total of  950.00  from holding Charoen Pokphand Enterprise or generate 10.44% 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.  Trade Van Information Services

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 18 (%) 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.

Trade Van Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Trade Van 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 Trade Van

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

The idea behind Charoen Pokphand Enterprise and Trade Van Information Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.