Correlation Between Great Elm and Chicken Soup

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

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

Diversification Opportunities for Great Elm and Chicken Soup

0.36

Correlation Coefficient

Great Elm  Chicken Soup

Weak diversification

The 3 months correlation between Great and Chicken is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and Chicken Soup For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup For and Great Elm 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 Great Elm Capital are associated (or correlated) with Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup For has no effect on the direction of Great Elm i.e., Great Elm and Chicken Soup go up and down completely randomly.

Pair Corralation between Great Elm and Chicken Soup

Assuming the 90 days horizon Great Elm Capital is expected to generate 0.04 times more return on investment than Chicken Soup. However, Great Elm Capital is 28.2 times less risky than Chicken Soup. It trades about 0.05 of its potential returns per unit of risk. Chicken Soup For is currently generating about -0.01 per unit of risk. If you would invest  2,384  in Great Elm Capital on September 28, 2024 and sell it today you would earn a total of  93.00  from holding Great Elm Capital or generate 3.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	36.19%
Values	Daily Returns

Great Elm Capital  vs.  Chicken Soup For

Great Elm Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

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. Even with relatively invariable technical and fundamental indicators, Chicken Soup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Great Elm and Chicken Soup

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

The idea behind Great Elm Capital and Chicken Soup For 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 CEOs Directory module to screen CEOs from public companies around the world.