Correlation Between Chrysalis Investments and Lindsell Train

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

By analyzing existing cross correlation between Chrysalis Investments and Lindsell Train Investment, you can compare the effects of market volatilities on Chrysalis Investments and Lindsell Train 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 Chrysalis Investments with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chrysalis Investments and Lindsell Train.

Diversification Opportunities for Chrysalis Investments and Lindsell Train

-0.09

Correlation Coefficient

Chrysalis Investments  Lindsell Train

Good diversification

The 3 months correlation between Chrysalis and Lindsell is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chrysalis Investments and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment and Chrysalis Investments 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 Chrysalis Investments are associated (or correlated) with Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Chrysalis Investments i.e., Chrysalis Investments and Lindsell Train go up and down completely randomly.

Pair Corralation between Chrysalis Investments and Lindsell Train

Assuming the 90 days trading horizon Chrysalis Investments is expected to under-perform the Lindsell Train. In addition to that, Chrysalis Investments is 1.24 times more volatile than Lindsell Train Investment. It trades about -0.11 of its total potential returns per unit of risk. Lindsell Train Investment is currently generating about 0.08 per unit of volatility. If you would invest  77,600  in Lindsell Train Investment on December 24, 2024 and sell it today you would earn a total of  5,000  from holding Lindsell Train Investment or generate 6.44% return on investment over 90 days.

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

Chrysalis Investments  vs.  Lindsell Train Investment

Chrysalis Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chrysalis Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lindsell Train Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lindsell Train may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chrysalis Investments and Lindsell Train

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

The idea behind Chrysalis Investments and Lindsell Train Investment 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.