Correlation Between Charoen Pokphand and Samart Public

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

By analyzing existing cross correlation between Charoen Pokphand Foods and Samart Public, you can compare the effects of market volatilities on Charoen Pokphand and Samart Public 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 Samart Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Samart Public.

Diversification Opportunities for Charoen Pokphand and Samart Public

0.09

Correlation Coefficient

Charoen Pokphand  Samart Public

Significant diversification

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

Pair Corralation between Charoen Pokphand and Samart Public

Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.53 times more return on investment than Samart Public. However, Charoen Pokphand is 1.53 times more volatile than Samart Public. It trades about 0.04 of its potential returns per unit of risk. Samart Public is currently generating about 0.02 per unit of risk. If you would invest  2,300  in Charoen Pokphand Foods on December 24, 2024 and sell it today you would earn a total of  110.00  from holding Charoen Pokphand Foods or generate 4.78% return on investment over 90 days.

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

Charoen Pokphand Foods  vs.  Samart Public

Charoen Pokphand Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charoen Pokphand Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Charoen Pokphand may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Samart Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Samart Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Charoen Pokphand and Samart Public

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

The idea behind Charoen Pokphand Foods and Samart 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.