Correlation Between Codere Online and FAT Brands

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

By analyzing existing cross correlation between Codere Online Luxembourg and FAT Brands, you can compare the effects of market volatilities on Codere Online and FAT Brands 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 Codere Online with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codere Online and FAT Brands.

Diversification Opportunities for Codere Online and FAT Brands

-0.54

Correlation Coefficient

Codere Online  FAT Brands

Excellent diversification

The 3 months correlation between Codere and FAT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Codere Online Luxembourg and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Codere Online 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 Codere Online Luxembourg are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Codere Online i.e., Codere Online and FAT Brands go up and down completely randomly.

Pair Corralation between Codere Online and FAT Brands

Assuming the 90 days horizon Codere Online Luxembourg is expected to generate 59.38 times more return on investment than FAT Brands. However, Codere Online is 59.38 times more volatile than FAT Brands. It trades about 0.1 of its potential returns per unit of risk. FAT Brands is currently generating about 0.06 per unit of risk. If you would invest  90.00  in Codere Online Luxembourg on October 3, 2024 and sell it today you would lose (30.00) from holding Codere Online Luxembourg or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.1%
Values	Daily Returns

Codere Online Luxembourg  vs.  FAT Brands

Codere Online Luxembourg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Codere Online Luxembourg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

FAT Brands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FAT Brands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, FAT Brands unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Codere Online and FAT Brands

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

The idea behind Codere Online Luxembourg and FAT Brands 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.