Correlation Between Chocoladefabriken and Ross Stores

Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Chocoladefabriken and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Ross Stores.

Diversification Opportunities for Chocoladefabriken and Ross Stores

-0.39

Correlation Coefficient

Chocoladefabriken  Ross Stores

Very good diversification

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

Pair Corralation between Chocoladefabriken and Ross Stores

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.56 times more return on investment than Ross Stores. However, Chocoladefabriken Lindt Spruengli is 1.79 times less risky than Ross Stores. It trades about 0.02 of its potential returns per unit of risk. Ross Stores is currently generating about -0.06 per unit of risk. If you would invest  9,980,000  in Chocoladefabriken Lindt Spruengli on October 5, 2024 and sell it today you would earn a total of  20,000  from holding Chocoladefabriken Lindt Spruengli or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Ross Stores

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ross Stores

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chocoladefabriken and Ross Stores

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

The idea behind Chocoladefabriken Lindt Spruengli and Ross Stores 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.