Correlation Between Chumporn Palm and CPL Group

Can any of the company-specific risk be diversified away by investing in both Chumporn Palm and CPL Group 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 Chumporn Palm and CPL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chumporn Palm Oil and CPL Group Public, you can compare the effects of market volatilities on Chumporn Palm and CPL Group 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 Chumporn Palm with a short position of CPL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chumporn Palm and CPL Group.

Diversification Opportunities for Chumporn Palm and CPL Group

-0.3

Correlation Coefficient

Chumporn Palm  CPL Group

Very good diversification

The 3 months correlation between Chumporn and CPL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chumporn Palm Oil and CPL Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPL Group Public and Chumporn Palm 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 Chumporn Palm Oil are associated (or correlated) with CPL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPL Group Public has no effect on the direction of Chumporn Palm i.e., Chumporn Palm and CPL Group go up and down completely randomly.

Pair Corralation between Chumporn Palm and CPL Group

Assuming the 90 days trading horizon Chumporn Palm Oil is expected to generate 0.47 times more return on investment than CPL Group. However, Chumporn Palm Oil is 2.12 times less risky than CPL Group. It trades about 0.13 of its potential returns per unit of risk. CPL Group Public is currently generating about -0.25 per unit of risk. If you would invest  274.00  in Chumporn Palm Oil on November 27, 2024 and sell it today you would earn a total of  28.00  from holding Chumporn Palm Oil or generate 10.22% return on investment over 90 days.

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

Chumporn Palm Oil  vs.  CPL Group Public

Chumporn Palm Oil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chumporn Palm Oil are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Chumporn Palm may actually be approaching a critical reversion point that can send shares even higher in March 2025.

CPL Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPL Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Chumporn Palm and CPL Group

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

The idea behind Chumporn Palm Oil and CPL Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.