Correlation Between CK Power and Surapon Foods

Can any of the company-specific risk be diversified away by investing in both CK Power and Surapon Foods 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 CK Power and Surapon Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CK Power and Surapon Foods

0.56

Correlation Coefficient

CK Power  Surapon Foods

Very weak diversification

The 3 months correlation between CKP-R and Surapon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and Surapon Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surapon Foods Public and CK Power 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 CK Power Public are associated (or correlated) with Surapon Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surapon Foods Public has no effect on the direction of CK Power i.e., CK Power and Surapon Foods go up and down completely randomly.

Pair Corralation between CK Power and Surapon Foods

Assuming the 90 days trading horizon CK Power is expected to generate 264.74 times less return on investment than Surapon Foods. But when comparing it to its historical volatility, CK Power Public is 32.95 times less risky than Surapon Foods. It trades about 0.01 of its potential returns per unit of risk. Surapon Foods Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  729.00  in Surapon Foods Public on September 13, 2024 and sell it today you would lose (44.00) from holding Surapon Foods Public or give up 6.04% of portfolio value over 90 days.

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

CK Power Public  vs.  Surapon Foods Public

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Surapon Foods Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surapon Foods Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Surapon Foods 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 CK Power and Surapon Foods

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

The idea behind CK Power Public and Surapon Foods 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.