Correlation Between Chocoladefabriken and Odyssean Investment

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

Diversification Opportunities for Chocoladefabriken and Odyssean Investment

0.87

Correlation Coefficient

Chocoladefabriken  Odyssean Investment

Very poor diversification

The 3 months correlation between Chocoladefabriken and Odyssean is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Odyssean Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssean Investment Trust 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 Odyssean Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssean Investment Trust has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Odyssean Investment go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Odyssean Investment

Assuming the 90 days trading horizon Chocoladefabriken is expected to generate 1.36 times less return on investment than Odyssean Investment. But when comparing it to its historical volatility, Chocoladefabriken Lindt Spruengli is 1.09 times less risky than Odyssean Investment. It trades about 0.02 of its potential returns per unit of risk. Odyssean Investment Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14,550  in Odyssean Investment Trust on October 5, 2024 and sell it today you would earn a total of  750.00  from holding Odyssean Investment Trust or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.04%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Odyssean Investment Trust

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.

Odyssean Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssean Investment Trust 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 Odyssean Investment

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

The idea behind Chocoladefabriken Lindt Spruengli and Odyssean Investment Trust 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.