Correlation Between Aryzta AG and Chocoladefabriken

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

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

Diversification Opportunities for Aryzta AG and Chocoladefabriken

0.95

Correlation Coefficient

Aryzta AG  Chocoladefabriken

Almost no diversification

The 3 months correlation between Aryzta and Chocoladefabriken is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Aryzta AG 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 Aryzta AG 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 Aryzta AG i.e., Aryzta AG and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Aryzta AG and Chocoladefabriken

Assuming the 90 days trading horizon Aryzta AG is expected to generate 1.31 times more return on investment than Chocoladefabriken. However, Aryzta AG is 1.31 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about -0.09 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about -0.14 per unit of risk. If you would invest  167.00  in Aryzta AG on September 4, 2024 and sell it today you would lose (13.00) from holding Aryzta AG or give up 7.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aryzta AG  vs.  Chocoladefabriken Lindt Spruen

Aryzta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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 abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Aryzta AG and Chocoladefabriken

The main advantage of trading using opposite Aryzta AG and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG 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 Aryzta AG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.