Correlation Between Chicken Soup and IMedia Brands

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

By analyzing existing cross correlation between Chicken Soup For and IMedia Brands 85, you can compare the effects of market volatilities on Chicken Soup and IMedia Brands 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 Chicken Soup with a short position of IMedia Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicken Soup and IMedia Brands.

Diversification Opportunities for Chicken Soup and IMedia Brands

0.3

Correlation Coefficient

Chicken Soup  IMedia Brands

Weak diversification

The 3 months correlation between Chicken and IMedia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chicken Soup For and IMedia Brands 85 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMedia Brands 85 and Chicken 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 Chicken Soup For are associated (or correlated) with IMedia Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMedia Brands 85 has no effect on the direction of Chicken Soup i.e., Chicken Soup and IMedia Brands go up and down completely randomly.

Pair Corralation between Chicken Soup and IMedia Brands

Assuming the 90 days horizon Chicken Soup For is expected to generate 0.73 times more return on investment than IMedia Brands. However, Chicken Soup For is 1.37 times less risky than IMedia Brands. It trades about -0.09 of its potential returns per unit of risk. IMedia Brands 85 is currently generating about -0.07 per unit of risk. If you would invest  1,665  in Chicken Soup For on September 27, 2024 and sell it today you would lose (1,638) from holding Chicken Soup For or give up 98.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.2%
Values	Daily Returns

Chicken Soup For  vs.  IMedia Brands 85

Chicken Soup For

Risk-Adjusted Performance

0 of 100

Very Weak

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

IMedia Brands 85

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IMedia Brands 85 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, IMedia Brands is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chicken Soup and IMedia Brands

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

The idea behind Chicken Soup For and IMedia Brands 85 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.