Correlation Between Charoen Pokphand and Workpoint Entertainment

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

Diversification Opportunities for Charoen Pokphand and Workpoint Entertainment

0.85

Correlation Coefficient

Charoen Pokphand  Workpoint Entertainment

Very poor diversification

The 3 months correlation between Charoen and Workpoint is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Workpoint Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workpoint Entertainment 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 Workpoint Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workpoint Entertainment has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Workpoint Entertainment go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Workpoint Entertainment

Assuming the 90 days trading horizon Charoen Pokphand Foods is expected to generate 1.1 times more return on investment than Workpoint Entertainment. However, Charoen Pokphand is 1.1 times more volatile than Workpoint Entertainment Public. It trades about -0.09 of its potential returns per unit of risk. Workpoint Entertainment Public is currently generating about -0.41 per unit of risk. If you would invest  2,500  in Charoen Pokphand Foods on October 6, 2024 and sell it today you would lose (210.00) from holding Charoen Pokphand Foods or give up 8.4% of portfolio value over 90 days.

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

Charoen Pokphand Foods  vs.  Workpoint Entertainment Public

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 latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Workpoint Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workpoint Entertainment Public 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 February 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 Workpoint Entertainment

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

The idea behind Charoen Pokphand Foods and Workpoint Entertainment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.