Correlation Between Charoen Pokphand and ICC International

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

Diversification Opportunities for Charoen Pokphand and ICC International

0.08

Correlation Coefficient

Charoen Pokphand  ICC International

Significant diversification

The 3 months correlation between Charoen and ICC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and ICC International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC International 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 ICC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC International Public has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and ICC International go up and down completely randomly.

Pair Corralation between Charoen Pokphand and ICC International

Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.11 times more return on investment than ICC International. However, Charoen Pokphand is 1.11 times more volatile than ICC International Public. It trades about 0.04 of its potential returns per unit of risk. ICC International Public is currently generating about -0.01 per unit of risk. If you would invest  2,270  in Charoen Pokphand Foods on December 21, 2024 and sell it today you would earn a total of  90.00  from holding Charoen Pokphand Foods or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Charoen Pokphand Foods  vs.  ICC International Public

Charoen Pokphand Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charoen Pokphand Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Charoen Pokphand is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ICC International Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICC International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, ICC International 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 Charoen Pokphand and ICC International

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

The idea behind Charoen Pokphand Foods and ICC International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.