Correlation Between KGI Securities and Charoen Pokphand

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

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

Diversification Opportunities for KGI Securities and Charoen Pokphand

0.49

Correlation Coefficient

KGI Securities  Charoen Pokphand

Very weak diversification

The 3 months correlation between KGI and Charoen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KGI Securities Public and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and KGI Securities 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 KGI Securities Public are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Foods has no effect on the direction of KGI Securities i.e., KGI Securities and Charoen Pokphand go up and down completely randomly.

Pair Corralation between KGI Securities and Charoen Pokphand

Assuming the 90 days trading horizon KGI Securities Public is expected to under-perform the Charoen Pokphand. But the stock apears to be less risky and, when comparing its historical volatility, KGI Securities Public is 2.03 times less risky than Charoen Pokphand. The stock trades about -0.18 of its potential returns per unit of risk. The Charoen Pokphand Foods is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,460  in Charoen Pokphand Foods on September 15, 2024 and sell it today you would lose (60.00) from holding Charoen Pokphand Foods or give up 2.44% of portfolio value over 90 days.

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

KGI Securities Public  vs.  Charoen Pokphand Foods

KGI Securities Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Charoen Pokphand Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KGI Securities and Charoen Pokphand

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

The idea behind KGI Securities Public and Charoen Pokphand Foods 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.