Correlation Between CH Karnchang and LPN Development

Can any of the company-specific risk be diversified away by investing in both CH Karnchang and LPN Development 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 CH Karnchang and LPN Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CH Karnchang Public and LPN Development Public, you can compare the effects of market volatilities on CH Karnchang and LPN Development 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 CH Karnchang with a short position of LPN Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of CH Karnchang and LPN Development.

Diversification Opportunities for CH Karnchang and LPN Development

0.76

Correlation Coefficient

CH Karnchang  LPN Development

Poor diversification

The 3 months correlation between CH Karnchang and LPN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CH Karnchang Public and LPN Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPN Development Public and CH Karnchang 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 CH Karnchang Public are associated (or correlated) with LPN Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPN Development Public has no effect on the direction of CH Karnchang i.e., CH Karnchang and LPN Development go up and down completely randomly.

Pair Corralation between CH Karnchang and LPN Development

Assuming the 90 days horizon CH Karnchang Public is expected to under-perform the LPN Development. But the stock apears to be less risky and, when comparing its historical volatility, CH Karnchang Public is 25.01 times less risky than LPN Development. The stock trades about -0.02 of its potential returns per unit of risk. The LPN Development Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  420.00  in LPN Development Public on September 26, 2024 and sell it today you would lose (172.00) from holding LPN Development Public or give up 40.95% of portfolio value over 90 days.

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

CH Karnchang Public  vs.  LPN Development Public

CH Karnchang Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CH Karnchang Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

LPN Development Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LPN Development 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 basic indicators 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 CH Karnchang and LPN Development

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

The idea behind CH Karnchang Public and LPN Development 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..