Correlation Between Chia Her and Gourmet Master

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

By analyzing existing cross correlation between Chia Her Industrial and Gourmet Master Co, you can compare the effects of market volatilities on Chia Her and Gourmet Master 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 Chia Her with a short position of Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Gourmet Master.

Diversification Opportunities for Chia Her and Gourmet Master

-0.17

Correlation Coefficient

Chia Her  Gourmet Master

Good diversification

The 3 months correlation between Chia and Gourmet is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master and Chia Her 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 Chia Her Industrial are associated (or correlated) with Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Chia Her i.e., Chia Her and Gourmet Master go up and down completely randomly.

Pair Corralation between Chia Her and Gourmet Master

Assuming the 90 days trading horizon Chia Her Industrial is expected to under-perform the Gourmet Master. But the stock apears to be less risky and, when comparing its historical volatility, Chia Her Industrial is 1.03 times less risky than Gourmet Master. The stock trades about -0.23 of its potential returns per unit of risk. The Gourmet Master Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,720  in Gourmet Master Co on December 30, 2024 and sell it today you would lose (380.00) from holding Gourmet Master Co or give up 3.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chia Her Industrial  vs.  Gourmet Master Co

Chia Her Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia Her Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gourmet Master

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gourmet Master Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gourmet Master is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chia Her and Gourmet Master

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

The idea behind Chia Her Industrial and Gourmet Master Co 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.