Correlation Between Chemtrade Logistics and Plantify Foods

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

By analyzing existing cross correlation between Chemtrade Logistics Income and Plantify Foods, you can compare the effects of market volatilities on Chemtrade Logistics and Plantify Foods 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 Chemtrade Logistics with a short position of Plantify Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and Plantify Foods.

Diversification Opportunities for Chemtrade Logistics and Plantify Foods

-0.68

Correlation Coefficient

Chemtrade Logistics  Plantify Foods

Excellent diversification

The 3 months correlation between Chemtrade and Plantify is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Plantify Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plantify Foods and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Plantify Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plantify Foods has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Plantify Foods go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Plantify Foods

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to under-perform the Plantify Foods. But the stock apears to be less risky and, when comparing its historical volatility, Chemtrade Logistics Income is 1.78 times less risky than Plantify Foods. The stock trades about -0.1 of its potential returns per unit of risk. The Plantify Foods is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Plantify Foods on December 25, 2024 and sell it today you would earn a total of  10.00  from holding Plantify Foods or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Chemtrade Logistics Income  vs.  Plantify Foods

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Plantify Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plantify Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Plantify Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemtrade Logistics and Plantify Foods

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

The idea behind Chemtrade Logistics Income and Plantify Foods 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.