Correlation Between Charoen Pokphand and Eastern Star

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

Diversification Opportunities for Charoen Pokphand and Eastern Star

-0.1

Correlation Coefficient

Charoen Pokphand  Eastern Star

Good diversification

The 3 months correlation between Charoen and Eastern is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Eastern Star Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Star Real 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 Eastern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Star Real has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Eastern Star go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Eastern Star

Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to under-perform the Eastern Star. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Foods is 101.99 times less risky than Eastern Star. The stock trades about -0.05 of its potential returns per unit of risk. The Eastern Star Real is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Eastern Star Real on September 3, 2024 and sell it today you would earn a total of  23.00  from holding Eastern Star Real or generate 9.223372036854776E16% 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.  Eastern Star Real

Charoen Pokphand Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eastern Star Real

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Star Real are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Eastern Star sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charoen Pokphand and Eastern Star

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

The idea behind Charoen Pokphand Foods and Eastern Star Real 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..