Correlation Between Chocoladefabriken and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken and G5 Entertainment 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 G5 Entertainment 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 G5 Entertainment AB, you can compare the effects of market volatilities on Chocoladefabriken and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and G5 Entertainment.

Diversification Opportunities for Chocoladefabriken and G5 Entertainment

-0.15

Correlation Coefficient

Chocoladefabriken  G5 Entertainment

Good diversification

The 3 months correlation between Chocoladefabriken and 0QUS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and G5 Entertainment go up and down completely randomly.

Pair Corralation between Chocoladefabriken and G5 Entertainment

Assuming the 90 days trading horizon Chocoladefabriken is expected to generate 9.89 times less return on investment than G5 Entertainment. But when comparing it to its historical volatility, Chocoladefabriken Lindt Spruengli is 2.46 times less risky than G5 Entertainment. It trades about 0.06 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  9,680  in G5 Entertainment AB on October 20, 2024 and sell it today you would earn a total of  2,240  from holding G5 Entertainment AB or generate 23.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  G5 Entertainment AB

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 comparatively stable basic indicators, Chocoladefabriken is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

G5 Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chocoladefabriken and G5 Entertainment

The main advantage of trading using opposite Chocoladefabriken and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind Chocoladefabriken Lindt Spruengli and G5 Entertainment AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.