Correlation Between Komercni Banka and Chocoladefabriken

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

By analyzing existing cross correlation between Komercni Banka and Chocoladefabriken Lindt Spruengli, you can compare the effects of market volatilities on Komercni Banka and Chocoladefabriken 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 Komercni Banka with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Komercni Banka and Chocoladefabriken.

Diversification Opportunities for Komercni Banka and Chocoladefabriken

-0.1

Correlation Coefficient

Komercni Banka  Chocoladefabriken

Good diversification

The 3 months correlation between Komercni and Chocoladefabriken is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Komercni Banka and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Komercni Banka 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 Komercni Banka are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Komercni Banka i.e., Komercni Banka and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Komercni Banka and Chocoladefabriken

Assuming the 90 days trading horizon Komercni Banka is expected to generate 6.71 times more return on investment than Chocoladefabriken. However, Komercni Banka is 6.71 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.04 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.17 per unit of risk. If you would invest  53,400  in Komercni Banka on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Komercni Banka or generate 0.0% return on investment over 90 days.

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

Komercni Banka  vs.  Chocoladefabriken Lindt Spruen

Komercni Banka

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Komercni Banka are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Komercni Banka unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Spruengli are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chocoladefabriken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Komercni Banka and Chocoladefabriken

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

The idea behind Komercni Banka and Chocoladefabriken Lindt Spruengli 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..