Correlation Between Ares International and Charoen Pokphand

Can any of the company-specific risk be diversified away by investing in both Ares International and Charoen Pokphand 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 Ares International and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares International Corp and Charoen Pokphand Enterprise, you can compare the effects of market volatilities on Ares International and Charoen Pokphand 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 Ares International with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares International and Charoen Pokphand.

Diversification Opportunities for Ares International and Charoen Pokphand

-0.3

Correlation Coefficient

Ares International  Charoen Pokphand

Very good diversification

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

Pair Corralation between Ares International and Charoen Pokphand

Assuming the 90 days trading horizon Ares International Corp is expected to generate 4.79 times more return on investment than Charoen Pokphand. However, Ares International is 4.79 times more volatile than Charoen Pokphand Enterprise. It trades about 0.04 of its potential returns per unit of risk. Charoen Pokphand Enterprise is currently generating about -0.48 per unit of risk. If you would invest  5,220  in Ares International Corp on October 6, 2024 and sell it today you would earn a total of  90.00  from holding Ares International Corp or generate 1.72% return on investment over 90 days.

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

Ares International Corp  vs.  Charoen Pokphand Enterprise

Ares International Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ares International Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ares International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Ares International and Charoen Pokphand

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

The idea behind Ares International Corp and Charoen Pokphand Enterprise 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.