Correlation Between Delfi and Chocoladefabriken

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

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

Diversification Opportunities for Delfi and Chocoladefabriken

-0.19

Correlation Coefficient

Delfi  Chocoladefabriken

Good diversification

The 3 months correlation between Delfi and Chocoladefabriken is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Delfi Limited and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Delfi 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 Delfi Limited 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 Delfi i.e., Delfi and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Delfi and Chocoladefabriken

Assuming the 90 days horizon Delfi Limited is expected to generate 0.92 times more return on investment than Chocoladefabriken. However, Delfi Limited is 1.08 times less risky than Chocoladefabriken. It trades about 0.03 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about -0.17 per unit of risk. If you would invest  63.00  in Delfi Limited on September 5, 2024 and sell it today you would earn a total of  1.00  from holding Delfi Limited or generate 1.59% return on investment over 90 days.

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

Delfi Limited  vs.  Chocoladefabriken Lindt Sprngl

Delfi Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delfi Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Delfi is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Delfi and Chocoladefabriken

The main advantage of trading using opposite Delfi and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delfi 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 Delfi Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.