Correlation Between Chicken Soup and Reading International

Can any of the company-specific risk be diversified away by investing in both Chicken Soup and Reading International 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 Reading International 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 Reading International, you can compare the effects of market volatilities on Chicken Soup and Reading International 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 Reading International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicken Soup and Reading International.

Diversification Opportunities for Chicken Soup and Reading International

-0.27

Correlation Coefficient

Chicken Soup  Reading International

Very good diversification

The 3 months correlation between Chicken and Reading is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chicken Soup For and Reading International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reading International 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 Reading International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reading International has no effect on the direction of Chicken Soup i.e., Chicken Soup and Reading International go up and down completely randomly.

Pair Corralation between Chicken Soup and Reading International

Assuming the 90 days horizon Chicken Soup For is expected to generate 7.8 times more return on investment than Reading International. However, Chicken Soup is 7.8 times more volatile than Reading International. It trades about 0.01 of its potential returns per unit of risk. Reading International is currently generating about -0.03 per unit of risk. If you would invest  534.00  in Chicken Soup For on October 1, 2024 and sell it today you would lose (494.00) from holding Chicken Soup For or give up 92.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Chicken Soup For  vs.  Reading International

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.

Reading International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reading International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Chicken Soup and Reading International

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

The idea behind Chicken Soup For and Reading International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.