Correlation Between Louisa Professional and Chailease Holding
Can any of the company-specific risk be diversified away by investing in both Louisa Professional and Chailease Holding 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 Louisa Professional and Chailease Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and Chailease Holding Co, you can compare the effects of market volatilities on Louisa Professional and Chailease Holding 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 Louisa Professional with a short position of Chailease Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and Chailease Holding.
Diversification Opportunities for Louisa Professional and Chailease Holding
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Louisa and Chailease is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding and Louisa Professional 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 Louisa Professional Coffee are associated (or correlated) with Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of Louisa Professional i.e., Louisa Professional and Chailease Holding go up and down completely randomly.
Pair Corralation between Louisa Professional and Chailease Holding
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to under-perform the Chailease Holding. But the stock apears to be less risky and, when comparing its historical volatility, Louisa Professional Coffee is 1.42 times less risky than Chailease Holding. The stock trades about -0.12 of its potential returns per unit of risk. The Chailease Holding Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 17,900 in Chailease Holding Co on September 2, 2024 and sell it today you would lose (6,050) from holding Chailease Holding Co or give up 33.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisa Professional Coffee vs. Chailease Holding Co
Performance |
| Timeline |
| Louisa Professional |
| Chailease Holding |
Louisa Professional and Chailease Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and Chailease Holding
The main advantage of trading using opposite Louisa Professional and Chailease Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional position performs unexpectedly, Chailease Holding 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 Chailease Holding will offset losses from the drop in Chailease Holding's long position.| Louisa Professional vs. Gourmet Master Co | Louisa Professional vs. Wowprime Corp | Louisa Professional vs. New Palace International |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |