Correlation Between Campbell Soup and TDH Holdings

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

By analyzing existing cross correlation between Campbell Soup and TDH Holdings, you can compare the effects of market volatilities on Campbell Soup and TDH Holdings 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 TDH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and TDH Holdings.

Diversification Opportunities for Campbell Soup and TDH Holdings

-0.09

Correlation Coefficient

Campbell Soup  TDH Holdings

Good diversification

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

Pair Corralation between Campbell Soup and TDH Holdings

Considering the 90-day investment horizon Campbell Soup is expected to generate 0.51 times more return on investment than TDH Holdings. However, Campbell Soup is 1.96 times less risky than TDH Holdings. It trades about -0.02 of its potential returns per unit of risk. TDH Holdings is currently generating about -0.05 per unit of risk. If you would invest  4,103  in Campbell Soup on December 28, 2024 and sell it today you would lose (145.00) from holding Campbell Soup or give up 3.53% of portfolio value over 90 days.

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

Campbell Soup  vs.  TDH Holdings

Campbell Soup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Campbell Soup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

TDH Holdings

Risk-Adjusted Performance

Weak

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

Pair Trading with Campbell Soup and TDH Holdings

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

The idea behind Campbell Soup and TDH Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.