Correlation Between Akr Corporindo and Charoen Pokphand

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

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

Diversification Opportunities for Akr Corporindo and Charoen Pokphand

-0.22

Correlation Coefficient

Akr Corporindo  Charoen Pokphand

Very good diversification

The 3 months correlation between Akr and Charoen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Akr Corporindo Tbk and Charoen Pokphand Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Ind and Akr Corporindo 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 Akr Corporindo Tbk 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 Ind has no effect on the direction of Akr Corporindo i.e., Akr Corporindo and Charoen Pokphand go up and down completely randomly.

Pair Corralation between Akr Corporindo and Charoen Pokphand

Assuming the 90 days trading horizon Akr Corporindo Tbk is expected to generate 1.13 times more return on investment than Charoen Pokphand. However, Akr Corporindo is 1.13 times more volatile than Charoen Pokphand Indonesia. It trades about 0.0 of its potential returns per unit of risk. Charoen Pokphand Indonesia is currently generating about -0.03 per unit of risk. If you would invest  112,000  in Akr Corporindo Tbk on December 30, 2024 and sell it today you would lose (2,500) from holding Akr Corporindo Tbk or give up 2.23% of portfolio value over 90 days.

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

Akr Corporindo Tbk  vs.  Charoen Pokphand Indonesia

Akr Corporindo Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akr Corporindo Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Akr Corporindo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Charoen Pokphand Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charoen Pokphand Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Charoen Pokphand is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Akr Corporindo and Charoen Pokphand

The main advantage of trading using opposite Akr Corporindo and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akr Corporindo 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 Akr Corporindo Tbk and Charoen Pokphand Indonesia 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.