Correlation Between S Khonkaen and Charoen Pokphand

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

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

Diversification Opportunities for S Khonkaen and Charoen Pokphand

0.81

Correlation Coefficient

S Khonkaen  Charoen Pokphand

Very poor diversification

The 3 months correlation between SORKON and Charoen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding S Khonkaen Foods 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 S Khonkaen 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 S Khonkaen Foods 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 S Khonkaen i.e., S Khonkaen and Charoen Pokphand go up and down completely randomly.

Pair Corralation between S Khonkaen and Charoen Pokphand

Assuming the 90 days trading horizon S Khonkaen Foods is expected to generate 0.5 times more return on investment than Charoen Pokphand. However, S Khonkaen Foods is 2.02 times less risky than Charoen Pokphand. It trades about -0.08 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about -0.07 per unit of risk. If you would invest  417.00  in S Khonkaen Foods on April 25, 2025 and sell it today you would lose (21.00) from holding S Khonkaen Foods or give up 5.04% of portfolio value over 90 days.

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

S Khonkaen Foods  vs.  Charoen Pokphand Foods

S Khonkaen Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days S Khonkaen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, S Khonkaen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with S Khonkaen and Charoen Pokphand

The main advantage of trading using opposite S Khonkaen and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Khonkaen 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 S Khonkaen Foods 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.