Correlation Between PureTech Health and Chocoladefabriken

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

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

Diversification Opportunities for PureTech Health and Chocoladefabriken

-0.48

Correlation Coefficient

PureTech Health  Chocoladefabriken

Very good diversification

The 3 months correlation between PureTech and Chocoladefabriken is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and PureTech Health 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 PureTech Health 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 PureTech Health i.e., PureTech Health and Chocoladefabriken go up and down completely randomly.

Pair Corralation between PureTech Health and Chocoladefabriken

Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Chocoladefabriken. In addition to that, PureTech Health is 3.98 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about -0.16 of its total potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.02 per unit of volatility. If you would invest  9,980,000  in Chocoladefabriken Lindt Spruengli on October 5, 2024 and sell it today you would earn a total of  20,000  from holding Chocoladefabriken Lindt Spruengli or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

PureTech Health plc  vs.  Chocoladefabriken Lindt Spruen

PureTech Health plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PureTech Health and Chocoladefabriken

The main advantage of trading using opposite PureTech Health and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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 PureTech Health plc and Chocoladefabriken Lindt Spruengli 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.