Correlation Between Charoen Pokphand and Thai Union

Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Thai Union 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 Thai Union 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 Thai Union Group, you can compare the effects of market volatilities on Charoen Pokphand and Thai Union 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 Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Thai Union.

Diversification Opportunities for Charoen Pokphand and Thai Union

-0.16

Correlation Coefficient

Charoen Pokphand  Thai Union

Good diversification

The 3 months correlation between Charoen and Thai is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group 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 Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Thai Union go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Thai Union

Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.08 times more return on investment than Thai Union. However, Charoen Pokphand is 1.08 times more volatile than Thai Union Group. It trades about 0.04 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.12 per unit of risk. If you would invest  2,280  in Charoen Pokphand Foods on December 30, 2024 and sell it today you would earn a total of  110.00  from holding Charoen Pokphand Foods or generate 4.82% return on investment over 90 days.

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

Charoen Pokphand Foods  vs.  Thai Union Group

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.

Thai Union Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Union Group 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 forward-looking signals 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 Charoen Pokphand and Thai Union

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

The idea behind Charoen Pokphand Foods and Thai Union Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.