Correlation Between Plantify Foods and Chemtrade Logistics

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

By analyzing existing cross correlation between Plantify Foods and Chemtrade Logistics Income, you can compare the effects of market volatilities on Plantify Foods and Chemtrade Logistics 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 Plantify Foods with a short position of Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plantify Foods and Chemtrade Logistics.

Diversification Opportunities for Plantify Foods and Chemtrade Logistics

-0.68

Correlation Coefficient

Plantify Foods  Chemtrade Logistics

Excellent diversification

The 3 months correlation between Plantify and Chemtrade is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Plantify Foods and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and Plantify Foods 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 Plantify Foods are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of Plantify Foods i.e., Plantify Foods and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between Plantify Foods and Chemtrade Logistics

Assuming the 90 days trading horizon Plantify Foods is expected to generate 1.78 times more return on investment than Chemtrade Logistics. However, Plantify Foods is 1.78 times more volatile than Chemtrade Logistics Income. It trades about 0.18 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.1 per unit of risk. If you would invest  30.00  in Plantify Foods on December 25, 2024 and sell it today you would earn a total of  10.00  from holding Plantify Foods or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Plantify Foods  vs.  Chemtrade Logistics Income

Plantify Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plantify Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Plantify Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Plantify Foods and Chemtrade Logistics

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

The idea behind Plantify Foods and Chemtrade Logistics Income 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.