Correlation Between Krebs Biochemicals and Chalet Hotels

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Can any of the company-specific risk be diversified away by investing in both Krebs Biochemicals and Chalet Hotels 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 Krebs Biochemicals and Chalet Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krebs Biochemicals and and Chalet Hotels Limited, you can compare the effects of market volatilities on Krebs Biochemicals and Chalet Hotels 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 Krebs Biochemicals with a short position of Chalet Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krebs Biochemicals and Chalet Hotels.

Diversification Opportunities for Krebs Biochemicals and Chalet Hotels

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Krebs and Chalet is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Krebs Biochemicals and and Chalet Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalet Hotels Limited and Krebs Biochemicals 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 Krebs Biochemicals and are associated (or correlated) with Chalet Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalet Hotels Limited has no effect on the direction of Krebs Biochemicals i.e., Krebs Biochemicals and Chalet Hotels go up and down completely randomly.

Pair Corralation between Krebs Biochemicals and Chalet Hotels

Assuming the 90 days trading horizon Krebs Biochemicals and is expected to under-perform the Chalet Hotels. In addition to that, Krebs Biochemicals is 1.35 times more volatile than Chalet Hotels Limited. It trades about -0.2 of its total potential returns per unit of risk. Chalet Hotels Limited is currently generating about -0.03 per unit of volatility. If you would invest  73,485  in Chalet Hotels Limited on November 28, 2024 and sell it today you would lose (1,625) from holding Chalet Hotels Limited or give up 2.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Krebs Biochemicals and  vs.  Chalet Hotels Limited

 Performance 
       Timeline  
Krebs Biochemicals and 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Krebs Biochemicals and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Chalet Hotels Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Chalet Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Krebs Biochemicals and Chalet Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Krebs Biochemicals and Chalet Hotels

The main advantage of trading using opposite Krebs Biochemicals and Chalet Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krebs Biochemicals position performs unexpectedly, Chalet Hotels 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 Chalet Hotels will offset losses from the drop in Chalet Hotels' long position.
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The idea behind Krebs Biochemicals and and Chalet Hotels Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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