Correlation Between Chocoladefabriken and Banque Cantonale

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

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

Diversification Opportunities for Chocoladefabriken and Banque Cantonale

0.29

Correlation Coefficient

Chocoladefabriken  Banque Cantonale

Modest diversification

The 3 months correlation between Chocoladefabriken and Banque is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Banque Cantonale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque Cantonale and Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli are associated (or correlated) with Banque Cantonale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque Cantonale has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Banque Cantonale go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Banque Cantonale

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.69 times more return on investment than Banque Cantonale. However, Chocoladefabriken Lindt Spruengli is 1.45 times less risky than Banque Cantonale. It trades about -0.13 of its potential returns per unit of risk. Banque Cantonale is currently generating about -0.11 per unit of risk. If you would invest  1,088,000  in Chocoladefabriken Lindt Spruengli on September 14, 2024 and sell it today you would lose (91,500) from holding Chocoladefabriken Lindt Spruengli or give up 8.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Banque Cantonale

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Banque Cantonale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banque Cantonale has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chocoladefabriken and Banque Cantonale

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

The idea behind Chocoladefabriken Lindt Spruengli and Banque Cantonale 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.