Correlation Between Calbee and Danone SA

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

By analyzing existing cross correlation between Calbee Inc and Danone SA, you can compare the effects of market volatilities on Calbee and Danone SA 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 Calbee with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calbee and Danone SA.

Diversification Opportunities for Calbee and Danone SA

0.5

Correlation Coefficient

Calbee  Danone SA

Very weak diversification

The 3 months correlation between Calbee and Danone is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Calbee Inc and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Calbee 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 Calbee Inc are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Calbee i.e., Calbee and Danone SA go up and down completely randomly.

Pair Corralation between Calbee and Danone SA

Assuming the 90 days horizon Calbee is expected to generate 2.21 times less return on investment than Danone SA. In addition to that, Calbee is 2.71 times more volatile than Danone SA. It trades about 0.01 of its total potential returns per unit of risk. Danone SA is currently generating about 0.03 per unit of volatility. If you would invest  6,229  in Danone SA on September 20, 2024 and sell it today you would earn a total of  386.00  from holding Danone SA or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.33%
Values	Daily Returns

Calbee Inc  vs.  Danone SA

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Danone SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danone SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Calbee and Danone SA

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

The idea behind Calbee Inc and Danone SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.