Correlation Between Biglari Holdings and Chanson International

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

By analyzing existing cross correlation between Biglari Holdings and Chanson International Holding, you can compare the effects of market volatilities on Biglari Holdings and Chanson International 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 Biglari Holdings with a short position of Chanson International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Chanson International.

Diversification Opportunities for Biglari Holdings and Chanson International

0.24

Correlation Coefficient

Biglari Holdings  Chanson International

Modest diversification

The 3 months correlation between Biglari and Chanson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Chanson International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chanson International and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with Chanson International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chanson International has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Chanson International go up and down completely randomly.

Pair Corralation between Biglari Holdings and Chanson International

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.18 times more return on investment than Chanson International. However, Biglari Holdings is 5.6 times less risky than Chanson International. It trades about -0.08 of its potential returns per unit of risk. Chanson International Holding is currently generating about -0.23 per unit of risk. If you would invest  25,068  in Biglari Holdings on December 20, 2024 and sell it today you would lose (3,025) from holding Biglari Holdings or give up 12.07% of portfolio value over 90 days.

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

Biglari Holdings  vs.  Chanson International Holding

Biglari Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biglari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Chanson International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chanson International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Biglari Holdings and Chanson International

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

The idea behind Biglari Holdings and Chanson International Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.