Correlation Between London Security and Chocoladefabriken
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Chocoladefabriken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Chocoladefabriken Lindt Spruengli, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Chocoladefabriken.
Diversification Opportunities for London Security and Chocoladefabriken
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between London and Chocoladefabriken is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and London Security 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 London Security Plc 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 London Security i.e., London Security and Chocoladefabriken go up and down completely randomly.
Pair Corralation between London Security and Chocoladefabriken
Assuming the 90 days trading horizon London Security Plc is expected to generate 1.42 times more return on investment than Chocoladefabriken. However, London Security is 1.42 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.22 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about -0.13 per unit of risk. If you would invest 325,000 in London Security Plc on September 24, 2024 and sell it today you would earn a total of 15,000 from holding London Security Plc or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Chocoladefabriken Lindt Spruen
Performance |
| Timeline |
| London Security Plc |
| Chocoladefabriken Lindt |
London Security and Chocoladefabriken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Chocoladefabriken
The main advantage of trading using opposite London Security and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
| Chocoladefabriken vs. Uniper SE | Chocoladefabriken vs. Mulberry Group PLC | Chocoladefabriken vs. London Security Plc | Chocoladefabriken vs. Triad Group PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |