Correlation Between Charoen Pokphand and Matahari Department

Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Matahari Department 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 Matahari Department into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charoen Pokphand Indonesia and Matahari Department Store, you can compare the effects of market volatilities on Charoen Pokphand and Matahari Department 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 Matahari Department. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Matahari Department.

Diversification Opportunities for Charoen Pokphand and Matahari Department

0.0

Correlation Coefficient

Charoen Pokphand  Matahari Department

Pay attention - limited upside

The 3 months correlation between Charoen and Matahari is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store 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 Indonesia are associated (or correlated) with Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Matahari Department go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Matahari Department

If you would invest  0.00  in Charoen Pokphand Indonesia on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Charoen Pokphand Indonesia or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Charoen Pokphand Indonesia  vs.  Matahari Department Store

Charoen Pokphand Ind

Risk-Adjusted Performance

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Very Weak

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

Matahari Department Store

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matahari Department Store 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 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 Matahari Department

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

The idea behind Charoen Pokphand Indonesia and Matahari Department Store 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.