Correlation Between Chicken Soup and Great Elm

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

By analyzing existing cross correlation between Chicken Soup For and Great Elm Capital, you can compare the effects of market volatilities on Chicken Soup and Great Elm 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 Chicken Soup with a short position of Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicken Soup and Great Elm.

Diversification Opportunities for Chicken Soup and Great Elm

0.36

Correlation Coefficient

Chicken Soup  Great Elm

Weak diversification

The 3 months correlation between Chicken and Great is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chicken Soup For and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and Chicken Soup 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 Chicken Soup For are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Chicken Soup i.e., Chicken Soup and Great Elm go up and down completely randomly.

Pair Corralation between Chicken Soup and Great Elm

If you would invest  2,477  in Great Elm Capital on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Great Elm Capital or generate 0.0% return on investment over 90 days.

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

Chicken Soup For  vs.  Great Elm Capital

Chicken Soup For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicken Soup For has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Chicken Soup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Great Elm Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Elm Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Chicken Soup and Great Elm

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

The idea behind Chicken Soup For and Great Elm Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.