Correlation Between So Martinho and Chocoladefabriken

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

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

Diversification Opportunities for So Martinho and Chocoladefabriken

0.69

Correlation Coefficient

So Martinho  Chocoladefabriken

Poor diversification

The 3 months correlation between SMTO3 and Chocoladefabriken is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding So Martinho SA and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and So Martinho 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 So Martinho SA 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 So Martinho i.e., So Martinho and Chocoladefabriken go up and down completely randomly.

Pair Corralation between So Martinho and Chocoladefabriken

Assuming the 90 days trading horizon So Martinho SA is expected to generate 1.53 times more return on investment than Chocoladefabriken. However, So Martinho is 1.53 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.0 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  2,582  in So Martinho SA on September 12, 2024 and sell it today you would lose (36.00) from holding So Martinho SA or give up 1.39% of portfolio value over 90 days.

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

So Martinho SA  vs.  Chocoladefabriken Lindt Sprngl

So Martinho SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days So Martinho SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, So Martinho is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 So Martinho and Chocoladefabriken

The main advantage of trading using opposite So Martinho and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if So Martinho 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 So Martinho SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.