Correlation Between Vontobel Holding and Chocoladefabriken

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

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

Diversification Opportunities for Vontobel Holding and Chocoladefabriken

-0.33

Correlation Coefficient

Vontobel Holding  Chocoladefabriken

Very good diversification

The 3 months correlation between Vontobel and Chocoladefabriken is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vontobel Holding and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Vontobel Holding 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 Vontobel Holding 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 Vontobel Holding i.e., Vontobel Holding and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Vontobel Holding and Chocoladefabriken

Assuming the 90 days trading horizon Vontobel Holding is expected to generate 7.96 times less return on investment than Chocoladefabriken. But when comparing it to its historical volatility, Vontobel Holding is 1.28 times less risky than Chocoladefabriken. It trades about 0.03 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,007,000  in Chocoladefabriken Lindt Spruengli on December 30, 2024 and sell it today you would earn a total of  188,000  from holding Chocoladefabriken Lindt Spruengli or generate 18.67% return on investment over 90 days.

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

Vontobel Holding  vs.  Chocoladefabriken Lindt Spruen

Vontobel Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vontobel Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vontobel Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 fairly abnormal basic indicators, Chocoladefabriken showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vontobel Holding and Chocoladefabriken

The main advantage of trading using opposite Vontobel Holding and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vontobel Holding 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 Vontobel Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.