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

0.7

Correlation Coefficient

Barry Callebaut  Chocoladefabriken

Poor diversification

The 3 months correlation between Barry and Chocoladefabriken is 0.7. 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 AG is expected to under-perform the Chocoladefabriken. But the pink sheet apears to be less risky and, when comparing its historical volatility, Barry Callebaut AG is 1.83 times less risky than Chocoladefabriken. The pink sheet trades about -0.44 of its potential returns per unit of risk. The Chocoladefabriken Lindt Sprngli is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,097  in Chocoladefabriken Lindt Sprngli on October 12, 2024 and sell it today you would earn a total of  17.00  from holding Chocoladefabriken Lindt Sprngli or generate 1.55% return on investment over 90 days.

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

Barry Callebaut AG  vs.  Chocoladefabriken Lindt Sprngl

Barry Callebaut AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barry Callebaut AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Sprngli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.