Correlation Between Chocoladefabriken and Barry Callebaut

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

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

Diversification Opportunities for Chocoladefabriken and Barry Callebaut

0.01

Correlation Coefficient

Chocoladefabriken  Barry Callebaut

Significant diversification

The 3 months correlation between Chocoladefabriken and Barry is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Sprngl and Barry Callebaut AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barry Callebaut AG and Chocoladefabriken 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 Chocoladefabriken Lindt Sprngli are associated (or correlated) with Barry Callebaut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barry Callebaut AG has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Barry Callebaut go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Barry Callebaut

Assuming the 90 days horizon Chocoladefabriken Lindt Sprngli is expected to under-perform the Barry Callebaut. But the pink sheet apears to be less risky and, when comparing its historical volatility, Chocoladefabriken Lindt Sprngli is 4.41 times less risky than Barry Callebaut. The pink sheet trades about -0.33 of its potential returns per unit of risk. The Barry Callebaut AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,449  in Barry Callebaut AG on February 1, 2024 and sell it today you would earn a total of  105.00  from holding Barry Callebaut AG or generate 7.25% return on investment over 90 days.

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

Chocoladefabriken Lindt Sprngl  vs.  Barry Callebaut AG

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 June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Barry Callebaut AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barry Callebaut AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Barry Callebaut may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Chocoladefabriken and Barry Callebaut

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

The idea behind Chocoladefabriken Lindt Sprngli and Barry Callebaut AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.