Correlation Between Chocoladefabriken and Intermediate Capital

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

Diversification Opportunities for Chocoladefabriken and Intermediate Capital

0.02

Correlation Coefficient

Chocoladefabriken  Intermediate Capital

Significant diversification

The 3 months correlation between Chocoladefabriken and Intermediate is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Intermediate Capital go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Intermediate Capital

Assuming the 90 days trading horizon Chocoladefabriken is expected to generate 18.55 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Chocoladefabriken Lindt Spruengli is 1.89 times less risky than Intermediate Capital. It trades about 0.01 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  127,311  in Intermediate Capital Group on October 22, 2024 and sell it today you would earn a total of  82,689  from holding Intermediate Capital Group or generate 64.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.79%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Intermediate Capital Group

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.

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chocoladefabriken and Intermediate Capital

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

The idea behind Chocoladefabriken Lindt Spruengli and Intermediate Capital Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.