Correlation Between Rocky Mountain and Chocoladefabriken

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

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

Diversification Opportunities for Rocky Mountain and Chocoladefabriken

-0.87

Correlation Coefficient

Rocky Mountain  Chocoladefabriken

Pay attention - limited upside

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

Pair Corralation between Rocky Mountain and Chocoladefabriken

Given the investment horizon of 90 days Rocky Mountain Chocolate is expected to generate 3.54 times more return on investment than Chocoladefabriken. However, Rocky Mountain is 3.54 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.2 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about -0.19 per unit of risk. If you would invest  177.00  in Rocky Mountain Chocolate on September 12, 2024 and sell it today you would earn a total of  115.00  from holding Rocky Mountain Chocolate or generate 64.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Rocky Mountain Chocolate  vs.  Chocoladefabriken Lindt Sprngl

Rocky Mountain Chocolate

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Mountain Chocolate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Rocky Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Sprngli 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rocky Mountain and Chocoladefabriken

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

The idea behind Rocky Mountain Chocolate and Chocoladefabriken Lindt Sprngli 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.