Correlation Between Calbee and Planting Hope

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

By analyzing existing cross correlation between Calbee Inc and The Planting Hope, you can compare the effects of market volatilities on Calbee and Planting Hope 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 Planting Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calbee and Planting Hope.

Diversification Opportunities for Calbee and Planting Hope

-0.51

Correlation Coefficient

Calbee  Planting Hope

Excellent diversification

The 3 months correlation between Calbee and Planting is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Calbee Inc and The Planting Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planting Hope 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 Planting Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planting Hope has no effect on the direction of Calbee i.e., Calbee and Planting Hope go up and down completely randomly.

Pair Corralation between Calbee and Planting Hope

Assuming the 90 days horizon Calbee is expected to generate 372.15 times less return on investment than Planting Hope. But when comparing it to its historical volatility, Calbee Inc is 44.12 times less risky than Planting Hope. It trades about 0.02 of its potential returns per unit of risk. The Planting Hope is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in The Planting Hope on December 22, 2024 and sell it today you would earn a total of  1.51  from holding The Planting Hope or generate 15100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Calbee Inc  vs.  The Planting Hope

Calbee Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calbee Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Calbee is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Planting Hope

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Planting Hope are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Planting Hope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calbee and Planting Hope

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

The idea behind Calbee Inc and The Planting Hope 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.