Correlation Between Marstons PLC and Chanson International

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

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

Diversification Opportunities for Marstons PLC and Chanson International

-0.19

Correlation Coefficient

Marstons PLC  Chanson International

Good diversification

The 3 months correlation between Marstons and Chanson is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Chanson International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chanson International and Marstons PLC 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 Marstons PLC are associated (or correlated) with Chanson International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chanson International has no effect on the direction of Marstons PLC i.e., Marstons PLC and Chanson International go up and down completely randomly.

Pair Corralation between Marstons PLC and Chanson International

Assuming the 90 days horizon Marstons PLC is expected to generate 10.79 times less return on investment than Chanson International. But when comparing it to its historical volatility, Marstons PLC is 8.29 times less risky than Chanson International. It trades about 0.05 of its potential returns per unit of risk. Chanson International Holding is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Chanson International Holding on September 14, 2024 and sell it today you would earn a total of  582.00  from holding Chanson International Holding or generate 366.04% return on investment over 90 days.

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

Marstons PLC  vs.  Chanson International Holding

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chanson International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chanson International Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Chanson International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marstons PLC and Chanson International

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

The idea behind Marstons PLC and Chanson International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.