Correlation Between Chocoladefabriken and Overstock

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

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

Diversification Opportunities for Chocoladefabriken and Overstock

-0.39

Correlation Coefficient

Chocoladefabriken  Overstock

Very good diversification

The 3 months correlation between Chocoladefabriken and Overstock is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Overstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstock and Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli are associated (or correlated) with Overstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstock has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Overstock go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Overstock

Assuming the 90 days trading horizon Chocoladefabriken is expected to generate 1.52 times less return on investment than Overstock. But when comparing it to its historical volatility, Chocoladefabriken Lindt Spruengli is 5.0 times less risky than Overstock. It trades about 0.17 of its potential returns per unit of risk. Overstock is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  493.00  in Overstock on December 29, 2024 and sell it today you would earn a total of  40.00  from holding Overstock or generate 8.11% return on investment over 90 days.

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

Chocoladefabriken Lindt Spruen  vs.  Overstock

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.

Overstock

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Overstock are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Overstock unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chocoladefabriken and Overstock

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

The idea behind Chocoladefabriken Lindt Spruengli and Overstock 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.