Correlation Between Charoen Pokphand and Microsoft
Can any of the company-specific risk be diversified away by investing in both Charoen Pokphand and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Charoen Pokphand and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charoen Pokphand and Microsoft.
Diversification Opportunities for Charoen Pokphand and Microsoft
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charoen and Microsoft is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Charoen Pokphand Foods and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Charoen Pokphand i.e., Charoen Pokphand and Microsoft go up and down completely randomly.
Pair Corralation between Charoen Pokphand and Microsoft
Assuming the 90 days horizon Charoen Pokphand Foods is expected to generate 6.58 times more return on investment than Microsoft. However, Charoen Pokphand is 6.58 times more volatile than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about 0.05 per unit of risk. If you would invest 19.00 in Charoen Pokphand Foods on January 20, 2024 and sell it today you would earn a total of 46.00 from holding Charoen Pokphand Foods or generate 242.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.68% |
| Values | Daily Returns |
Charoen Pokphand Foods vs. Microsoft
Performance |
| Timeline |
| Charoen Pokphand Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Microsoft |
Charoen Pokphand and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charoen Pokphand and Microsoft
The main advantage of trading using opposite Charoen Pokphand and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charoen Pokphand position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Charoen Pokphand vs. Stepstone Group | Charoen Pokphand vs. Finnovate Acquisition Corp | Charoen Pokphand vs. Inflection Point Acquisition | Charoen Pokphand vs. Luxfer Holdings PLC |
| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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