Correlation Between Somboon Advance and Charoen Pokphand

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

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

Diversification Opportunities for Somboon Advance and Charoen Pokphand

-0.05

Correlation Coefficient

Somboon Advance  Charoen Pokphand

Good diversification

The 3 months correlation between Somboon and Charoen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Somboon Advance Technology 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 Somboon Advance 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 Somboon Advance Technology 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 Somboon Advance i.e., Somboon Advance and Charoen Pokphand go up and down completely randomly.

Pair Corralation between Somboon Advance and Charoen Pokphand

Assuming the 90 days trading horizon Somboon Advance Technology is expected to generate 0.7 times more return on investment than Charoen Pokphand. However, Somboon Advance Technology is 1.44 times less risky than Charoen Pokphand. It trades about 0.11 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.03 per unit of risk. If you would invest  1,140  in Somboon Advance Technology on April 22, 2025 and sell it today you would earn a total of  110.00  from holding Somboon Advance Technology or generate 9.65% return on investment over 90 days.

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

Somboon Advance Technology  vs.  Charoen Pokphand Foods

Somboon Advance Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Somboon Advance Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Somboon Advance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Charoen Pokphand Foods

Risk-Adjusted Performance

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 somewhat strong fundamental drivers, Charoen Pokphand is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Somboon Advance and Charoen Pokphand

The main advantage of trading using opposite Somboon Advance and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Somboon Advance 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 Somboon Advance Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.