Correlation Between PT Charoen and Mowi ASA

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

By analyzing existing cross correlation between PT Charoen Pokphand and Mowi ASA, you can compare the effects of market volatilities on PT Charoen and Mowi ASA 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 PT Charoen with a short position of Mowi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Charoen and Mowi ASA.

Diversification Opportunities for PT Charoen and Mowi ASA

-0.2

Correlation Coefficient

PT Charoen  Mowi ASA

Good diversification

The 3 months correlation between 0CP1 and Mowi is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Charoen Pokphand and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and PT Charoen 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 PT Charoen Pokphand are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of PT Charoen i.e., PT Charoen and Mowi ASA go up and down completely randomly.

Pair Corralation between PT Charoen and Mowi ASA

Assuming the 90 days trading horizon PT Charoen Pokphand is expected to under-perform the Mowi ASA. In addition to that, PT Charoen is 1.05 times more volatile than Mowi ASA. It trades about -0.03 of its total potential returns per unit of risk. Mowi ASA is currently generating about 0.1 per unit of volatility. If you would invest  1,430  in Mowi ASA on September 23, 2024 and sell it today you would earn a total of  214.00  from holding Mowi ASA or generate 14.97% return on investment over 90 days.

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

PT Charoen Pokphand  vs.  Mowi ASA

PT Charoen Pokphand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Charoen Pokphand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Charoen is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Mowi ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mowi ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Charoen and Mowi ASA

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

The idea behind PT Charoen Pokphand and Mowi ASA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.