Correlation Between Chocoladefabriken and Axfood AB

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

Diversification Opportunities for Chocoladefabriken and Axfood AB

0.91

Correlation Coefficient

Chocoladefabriken  Axfood AB

Almost no diversification

The 3 months correlation between Chocoladefabriken and Axfood is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Axfood AB go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Axfood AB

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.54 times more return on investment than Axfood AB. However, Chocoladefabriken Lindt Spruengli is 1.86 times less risky than Axfood AB. It trades about -0.14 of its potential returns per unit of risk. Axfood AB is currently generating about -0.19 per unit of risk. If you would invest  10,720,000  in Chocoladefabriken Lindt Spruengli on October 5, 2024 and sell it today you would lose (720,000) from holding Chocoladefabriken Lindt Spruengli or give up 6.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Axfood 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 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.

Axfood AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axfood AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Chocoladefabriken and Axfood AB

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

The idea behind Chocoladefabriken Lindt Spruengli and Axfood 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.