Correlation Between Charoen Pokphand and Taiwan Sakura

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

Diversification Opportunities for Charoen Pokphand and Taiwan Sakura

0.09

Correlation Coefficient

Charoen Pokphand  Taiwan Sakura

Significant diversification

The 3 months correlation between Charoen and Taiwan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Enterprise and Taiwan Sakura Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sakura Corp 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 Taiwan Sakura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sakura Corp has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Taiwan Sakura go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Taiwan Sakura

Assuming the 90 days trading horizon Charoen Pokphand is expected to generate 1.27 times less return on investment than Taiwan Sakura. In addition to that, Charoen Pokphand is 1.05 times more volatile than Taiwan Sakura Corp. It trades about 0.05 of its total potential returns per unit of risk. Taiwan Sakura Corp is currently generating about 0.06 per unit of volatility. If you would invest  6,190  in Taiwan Sakura Corp on September 15, 2024 and sell it today you would earn a total of  2,210  from holding Taiwan Sakura Corp or generate 35.7% 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.  Taiwan Sakura Corp

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.

Taiwan Sakura Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Sakura Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Sakura 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 Taiwan Sakura

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

The idea behind Charoen Pokphand Enterprise and Taiwan Sakura Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.