Correlation Between Castle Peak and Chiangmai Frozen

Can any of the company-specific risk be diversified away by investing in both Castle Peak and Chiangmai Frozen 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 Castle Peak and Chiangmai Frozen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Castle Peak Holdings and Chiangmai Frozen Foods, you can compare the effects of market volatilities on Castle Peak and Chiangmai Frozen 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 Castle Peak with a short position of Chiangmai Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Peak and Chiangmai Frozen.

Diversification Opportunities for Castle Peak and Chiangmai Frozen

0.66

Correlation Coefficient

Castle Peak  Chiangmai Frozen

Poor diversification

The 3 months correlation between Castle and Chiangmai is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Castle Peak Holdings and Chiangmai Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiangmai Frozen Foods and Castle Peak 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 Castle Peak Holdings are associated (or correlated) with Chiangmai Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiangmai Frozen Foods has no effect on the direction of Castle Peak i.e., Castle Peak and Chiangmai Frozen go up and down completely randomly.

Pair Corralation between Castle Peak and Chiangmai Frozen

Assuming the 90 days trading horizon Castle Peak is expected to generate 1.04 times less return on investment than Chiangmai Frozen. In addition to that, Castle Peak is 1.0 times more volatile than Chiangmai Frozen Foods. It trades about 0.12 of its total potential returns per unit of risk. Chiangmai Frozen Foods is currently generating about 0.12 per unit of volatility. If you would invest  0.00  in Chiangmai Frozen Foods on September 3, 2024 and sell it today you would earn a total of  202.00  from holding Chiangmai Frozen Foods or generate 9.223372036854776E16% return on investment over 90 days.

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

Castle Peak Holdings  vs.  Chiangmai Frozen Foods

Castle Peak Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Castle Peak Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical indicators, Castle Peak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chiangmai Frozen Foods

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Castle Peak and Chiangmai Frozen

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

The idea behind Castle Peak Holdings and Chiangmai Frozen Foods 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.