Correlation Between Chaoda Modern and Chocoladefabriken

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

By analyzing existing cross correlation between Chaoda Modern Agriculture and Chocoladefabriken Lindt Sprngli, you can compare the effects of market volatilities on Chaoda Modern and Chocoladefabriken 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 Chaoda Modern with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaoda Modern and Chocoladefabriken.

Diversification Opportunities for Chaoda Modern and Chocoladefabriken

-0.18

Correlation Coefficient

Chaoda Modern  Chocoladefabriken

Good diversification

The 3 months correlation between Chaoda and Chocoladefabriken is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chaoda Modern Agriculture and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Chaoda Modern 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 Chaoda Modern Agriculture are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Chaoda Modern i.e., Chaoda Modern and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Chaoda Modern and Chocoladefabriken

Assuming the 90 days horizon Chaoda Modern Agriculture is expected to generate 10.11 times more return on investment than Chocoladefabriken. However, Chaoda Modern is 10.11 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.23 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.07 per unit of risk. If you would invest  0.42  in Chaoda Modern Agriculture on October 27, 2024 and sell it today you would earn a total of  0.58  from holding Chaoda Modern Agriculture or generate 138.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Chaoda Modern Agriculture  vs.  Chocoladefabriken Lindt Sprngl

Chaoda Modern Agriculture

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chaoda Modern Agriculture are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Chaoda Modern reported solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Sprngli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chocoladefabriken is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chaoda Modern and Chocoladefabriken

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

The idea behind Chaoda Modern Agriculture and Chocoladefabriken Lindt Sprngli 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.