Correlation Between Charoen Pokphand and Panorama Sentrawisata

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

Diversification Opportunities for Charoen Pokphand and Panorama Sentrawisata

-0.63

Correlation Coefficient

Charoen Pokphand  Panorama Sentrawisata

Excellent diversification

The 3 months correlation between Charoen and Panorama is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Indonesia and Panorama Sentrawisata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panorama Sentrawisata Tbk 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 Panorama Sentrawisata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panorama Sentrawisata Tbk has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Panorama Sentrawisata go up and down completely randomly.

Pair Corralation between Charoen Pokphand and Panorama Sentrawisata

Assuming the 90 days trading horizon Charoen Pokphand Indonesia is expected to under-perform the Panorama Sentrawisata. But the stock apears to be less risky and, when comparing its historical volatility, Charoen Pokphand Indonesia is 1.54 times less risky than Panorama Sentrawisata. The stock trades about -0.09 of its potential returns per unit of risk. The Panorama Sentrawisata Tbk is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  55,500  in Panorama Sentrawisata Tbk on December 1, 2024 and sell it today you would earn a total of  26,500  from holding Panorama Sentrawisata Tbk or generate 47.75% return on investment over 90 days.

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

Charoen Pokphand Indonesia  vs.  Panorama Sentrawisata Tbk

Charoen Pokphand Ind

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Panorama Sentrawisata Tbk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panorama Sentrawisata Tbk are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panorama Sentrawisata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charoen Pokphand and Panorama Sentrawisata

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

The idea behind Charoen Pokphand Indonesia and Panorama Sentrawisata Tbk 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.