Correlation Between Barry Callebaut and Chocoladefabriken

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

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

Diversification Opportunities for Barry Callebaut and Chocoladefabriken

0.26

Correlation Coefficient

Barry Callebaut  Chocoladefabriken

Modest diversification

The 3 months correlation between Barry and Chocoladefabriken is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Barry Callebaut AG and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Barry Callebaut 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 Barry Callebaut 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 Barry Callebaut i.e., Barry Callebaut and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Barry Callebaut and Chocoladefabriken

Assuming the 90 days horizon Barry Callebaut is expected to generate 3.69 times less return on investment than Chocoladefabriken. But when comparing it to its historical volatility, Barry Callebaut AG is 1.31 times less risky than Chocoladefabriken. It trades about 0.04 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,126  in Chocoladefabriken Lindt Sprngli on December 24, 2024 and sell it today you would earn a total of  236.00  from holding Chocoladefabriken Lindt Sprngli or generate 20.96% return on investment over 90 days.

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

Barry Callebaut AG  vs.  Chocoladefabriken Lindt Sprngl

Barry Callebaut AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barry Callebaut AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Barry Callebaut is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chocoladefabriken Lindt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Sprngli are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chocoladefabriken showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barry Callebaut and Chocoladefabriken

The main advantage of trading using opposite Barry Callebaut and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barry Callebaut 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 Barry Callebaut AG and Chocoladefabriken Lindt Sprngli 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.