Correlation Between Charoen Pokphand and Holtek Semiconductor

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

Diversification Opportunities for Charoen Pokphand and Holtek Semiconductor

0.37

Correlation Coefficient

Charoen Pokphand  Holtek Semiconductor

Weak diversification

The 3 months correlation between Charoen and Holtek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Holtek Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holtek 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 Holtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holtek Semiconductor has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Holtek Semiconductor go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Holtek Semiconductor

Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to generate 0.68 times more return on investment than Holtek Semiconductor. However, Charoen Pokphand Enterprise is 1.48 times less risky than Holtek Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Holtek Semiconductor is currently generating about -0.04 per unit of risk. If you would invest  7,870  in Charoen Pokphand Enterprise on October 5, 2024 and sell it today you would earn a total of  1,280  from holding Charoen Pokphand Enterprise or generate 16.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Charoen Pokphand Enterprise  vs.  Holtek Semiconductor

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Holtek Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holtek Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Charoen Pokphand and Holtek Semiconductor

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

The idea behind Charoen Pokphand Enterprise and Holtek Semiconductor 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.