Correlation Between SoftBank Group and Chocoladefabriken

Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Chocoladefabriken 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 SoftBank Group and Chocoladefabriken into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoftBank Group Corp and Chocoladefabriken Lindt Spruengli, you can compare the effects of market volatilities on SoftBank Group and Chocoladefabriken 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 SoftBank Group with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Chocoladefabriken.

Diversification Opportunities for SoftBank Group and Chocoladefabriken

-0.19

Correlation Coefficient

SoftBank Group  Chocoladefabriken

Good diversification

The 3 months correlation between SoftBank and Chocoladefabriken is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of SoftBank Group i.e., SoftBank Group and Chocoladefabriken go up and down completely randomly.

Pair Corralation between SoftBank Group and Chocoladefabriken

Assuming the 90 days trading horizon SoftBank Group Corp is expected to under-perform the Chocoladefabriken. In addition to that, SoftBank Group is 2.52 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about -0.19 of its total potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about -0.06 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	78.26%
Values	Daily Returns

SoftBank Group Corp  vs.  Chocoladefabriken Lindt Spruen

SoftBank Group Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SoftBank Group may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

Pair Trading with SoftBank Group and Chocoladefabriken

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

The idea behind SoftBank Group Corp and Chocoladefabriken Lindt Spruengli 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.