Correlation Between Aryzta AG and Central Garden

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

By analyzing existing cross correlation between Aryzta AG PK and Central Garden Pet, you can compare the effects of market volatilities on Aryzta AG and Central Garden 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 Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and Central Garden.

Diversification Opportunities for Aryzta AG and Central Garden

-0.04

Correlation Coefficient

Aryzta AG  Central Garden

Good diversification

The 3 months correlation between Aryzta and Central is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet 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 PK are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Aryzta AG i.e., Aryzta AG and Central Garden go up and down completely randomly.

Pair Corralation between Aryzta AG and Central Garden

Assuming the 90 days horizon Aryzta AG PK is expected to under-perform the Central Garden. In addition to that, Aryzta AG is 1.23 times more volatile than Central Garden Pet. It trades about -0.11 of its total potential returns per unit of risk. Central Garden Pet is currently generating about 0.02 per unit of volatility. If you would invest  3,947  in Central Garden Pet on August 30, 2024 and sell it today you would earn a total of  69.00  from holding Central Garden Pet or generate 1.75% return on investment over 90 days.

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

Aryzta AG PK  vs.  Central Garden Pet

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Central Garden Pet

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Garden Pet are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Central Garden is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aryzta AG and Central Garden

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

The idea behind Aryzta AG PK and Central Garden Pet 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.