Correlation Between Chocoladefabriken and Neometals

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

Diversification Opportunities for Chocoladefabriken and Neometals

0.2

Correlation Coefficient

Chocoladefabriken  Neometals

Modest diversification

The 3 months correlation between Chocoladefabriken and Neometals is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Neometals go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Neometals

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.81 times more return on investment than Neometals. However, Chocoladefabriken Lindt Spruengli is 1.24 times less risky than Neometals. It trades about -0.06 of its potential returns per unit of risk. Neometals is currently generating about -0.21 per unit of risk. If you would invest  10,000,000  in Chocoladefabriken Lindt Spruengli on August 31, 2024 and sell it today you would lose (120,000) from holding Chocoladefabriken Lindt Spruengli or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Neometals

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.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Chocoladefabriken and Neometals

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

The idea behind Chocoladefabriken Lindt Spruengli and Neometals 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 Global Correlations module to find global opportunities by holding instruments from different markets.