Correlation Between Tattooed Chef and NUZE Old

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

By analyzing existing cross correlation between Tattooed Chef and NUZE Old, you can compare the effects of market volatilities on Tattooed Chef and NUZE Old 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 Tattooed Chef with a short position of NUZE Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tattooed Chef and NUZE Old.

Diversification Opportunities for Tattooed Chef and NUZE Old

0.7

Correlation Coefficient

Tattooed Chef  NUZE Old

Poor diversification

The 3 months correlation between Tattooed and NUZE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tattooed Chef and NUZE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUZE Old and Tattooed Chef 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 Tattooed Chef are associated (or correlated) with NUZE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUZE Old has no effect on the direction of Tattooed Chef i.e., Tattooed Chef and NUZE Old go up and down completely randomly.

Pair Corralation between Tattooed Chef and NUZE Old

If you would invest  127.00  in NUZE Old on September 3, 2024 and sell it today you would lose (28.00) from holding NUZE Old or give up 22.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.27%
Values	Daily Returns

Tattooed Chef  vs.  NUZE Old

Tattooed Chef

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tattooed Chef has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Tattooed Chef is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NUZE Old

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days NUZE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, NUZE Old exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tattooed Chef and NUZE Old

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

The idea behind Tattooed Chef and NUZE Old 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.