Correlation Between Kerry Group and Chocoladefabriken

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

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

Diversification Opportunities for Kerry Group and Chocoladefabriken

0.6

Correlation Coefficient

Kerry Group  Chocoladefabriken

Poor diversification

The 3 months correlation between Kerry and Chocoladefabriken is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Kerry Group 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 Kerry Group PLC 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 Kerry Group i.e., Kerry Group and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Kerry Group and Chocoladefabriken

Assuming the 90 days horizon Kerry Group PLC is expected to generate 2.14 times more return on investment than Chocoladefabriken. However, Kerry Group is 2.14 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.13 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.04 per unit of risk. If you would invest  9,642  in Kerry Group PLC on October 27, 2024 and sell it today you would earn a total of  435.00  from holding Kerry Group PLC or generate 4.51% return on investment over 90 days.

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

Kerry Group PLC  vs.  Chocoladefabriken Lindt Sprngl

Kerry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

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. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kerry Group and Chocoladefabriken

The main advantage of trading using opposite Kerry Group and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group 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 Kerry Group PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.