Correlation Between Seraphim Space and Chocoladefabriken

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

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

Diversification Opportunities for Seraphim Space and Chocoladefabriken

0.52

Correlation Coefficient

Seraphim Space  Chocoladefabriken

Very weak diversification

The 3 months correlation between Seraphim and Chocoladefabriken is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Seraphim Space Investment and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Seraphim Space 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 Seraphim Space Investment 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 Seraphim Space i.e., Seraphim Space and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Seraphim Space and Chocoladefabriken

Assuming the 90 days trading horizon Seraphim Space is expected to generate 2.52 times less return on investment than Chocoladefabriken. In addition to that, Seraphim Space is 1.91 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.03 of its total potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.17 per unit of volatility. If you would invest  10,000,000  in Chocoladefabriken Lindt Spruengli on December 29, 2024 and sell it today you would earn a total of  1,600,000  from holding Chocoladefabriken Lindt Spruengli or generate 16.0% return on investment over 90 days.

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

Seraphim Space Investment  vs.  Chocoladefabriken Lindt Spruen

Seraphim Space Investment

Risk-Adjusted Performance

Weak

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

Chocoladefabriken Lindt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Spruengli are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chocoladefabriken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seraphim Space and Chocoladefabriken

The main advantage of trading using opposite Seraphim Space and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seraphim Space 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 Seraphim Space Investment 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.