Correlation Between Chocoladefabriken and Adval Tech

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

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

Diversification Opportunities for Chocoladefabriken and Adval Tech

0.87

Correlation Coefficient

Chocoladefabriken  Adval Tech

Very poor diversification

The 3 months correlation between Chocoladefabriken and Adval is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Adval Tech go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Adval Tech

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.29 times more return on investment than Adval Tech. However, Chocoladefabriken Lindt Spruengli is 3.39 times less risky than Adval Tech. It trades about -0.11 of its potential returns per unit of risk. Adval Tech Holding is currently generating about -0.05 per unit of risk. If you would invest  10,620,000  in Chocoladefabriken Lindt Spruengli on September 14, 2024 and sell it today you would lose (720,000) from holding Chocoladefabriken Lindt Spruengli or give up 6.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	76.92%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Adval Tech Holding

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chocoladefabriken and Adval Tech

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

The idea behind Chocoladefabriken Lindt Spruengli and Adval Tech Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.