Correlation Between Charoen Pokphand and Flytech Technology

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

Diversification Opportunities for Charoen Pokphand and Flytech Technology

-0.3

Correlation Coefficient

Charoen Pokphand  Flytech Technology

Very good diversification

The 3 months correlation between Charoen and Flytech is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Flytech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flytech 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 Flytech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flytech Technology has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Flytech Technology go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Flytech Technology

Assuming the 90 days trading horizon Charoen Pokphand Enterprise is expected to under-perform the Flytech Technology. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Enterprise is 1.41 times less risky than Flytech Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Flytech Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,360  in Flytech Technology Co on October 4, 2024 and sell it today you would earn a total of  340.00  from holding Flytech Technology Co or generate 4.07% return on investment over 90 days.

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

Charoen Pokphand Enterprise  vs.  Flytech 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Flytech Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flytech Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Flytech Technology 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 Flytech Technology

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

The idea behind Charoen Pokphand Enterprise and Flytech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.