Correlation Between Campbell Soup and China Marine

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

By analyzing existing cross correlation between Campbell Soup and China Marine Food, you can compare the effects of market volatilities on Campbell Soup and China Marine 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 Campbell Soup with a short position of China Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and China Marine.

Diversification Opportunities for Campbell Soup and China Marine

0.77

Correlation Coefficient

Campbell Soup  China Marine

Poor diversification

The 3 months correlation between Campbell and China is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and China Marine Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Marine Food and Campbell Soup 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 Campbell Soup are associated (or correlated) with China Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Marine Food has no effect on the direction of Campbell Soup i.e., Campbell Soup and China Marine go up and down completely randomly.

Pair Corralation between Campbell Soup and China Marine

If you would invest  4,186  in Campbell Soup on October 3, 2024 and sell it today you would earn a total of  2.00  from holding Campbell Soup or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.37%
Values	Daily Returns

Campbell Soup  vs.  China Marine Food

Campbell Soup

Risk-Adjusted Performance

0 of 100

Very Weak

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

China Marine Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Marine Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, China Marine is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Campbell Soup and China Marine

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

The idea behind Campbell Soup and China Marine Food 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.