Correlation Between CH Karnchang and JRW Utility

Can any of the company-specific risk be diversified away by investing in both CH Karnchang and JRW Utility 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 CH Karnchang and JRW Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CH Karnchang Public and JRW Utility Public, you can compare the effects of market volatilities on CH Karnchang and JRW Utility 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 CH Karnchang with a short position of JRW Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of CH Karnchang and JRW Utility.

Diversification Opportunities for CH Karnchang and JRW Utility

0.84

Correlation Coefficient

CH Karnchang  JRW Utility

Very poor diversification

The 3 months correlation between CH Karnchang and JRW is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CH Karnchang Public and JRW Utility Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JRW Utility Public and CH Karnchang 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 CH Karnchang Public are associated (or correlated) with JRW Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JRW Utility Public has no effect on the direction of CH Karnchang i.e., CH Karnchang and JRW Utility go up and down completely randomly.

Pair Corralation between CH Karnchang and JRW Utility

Assuming the 90 days horizon CH Karnchang Public is expected to generate 0.97 times more return on investment than JRW Utility. However, CH Karnchang Public is 1.04 times less risky than JRW Utility. It trades about -0.16 of its potential returns per unit of risk. JRW Utility Public is currently generating about -0.2 per unit of risk. If you would invest  1,901  in CH Karnchang Public on December 30, 2024 and sell it today you would lose (471.00) from holding CH Karnchang Public or give up 24.78% of portfolio value over 90 days.

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

CH Karnchang Public  vs.  JRW Utility Public

CH Karnchang Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CH Karnchang Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

JRW Utility Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days JRW Utility Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CH Karnchang and JRW Utility

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

The idea behind CH Karnchang Public and JRW Utility Public 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.