Correlation Between Chia and Cult Food

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

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

Diversification Opportunities for Chia and Cult Food

0.12

Correlation Coefficient

Chia  Cult Food

Average diversification

The 3 months correlation between Chia and Cult is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Cult Food Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cult Food Science and Chia 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 Chia are associated (or correlated) with Cult Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cult Food Science has no effect on the direction of Chia i.e., Chia and Cult Food go up and down completely randomly.

Pair Corralation between Chia and Cult Food

Assuming the 90 days trading horizon Chia is expected to under-perform the Cult Food. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chia is 1.02 times less risky than Cult Food. The crypto coin trades about -0.1 of its potential returns per unit of risk. The Cult Food Science is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3.29  in Cult Food Science on December 19, 2024 and sell it today you would lose (0.89) from holding Cult Food Science or give up 27.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Chia  vs.  Cult Food Science

Chia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Chia shareholders.

Cult Food Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cult Food Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chia and Cult Food

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

The idea behind Chia and Cult Food Science 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.