Correlation Between Chocoladefabriken and Software Circle

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Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken and Software Circle 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 Software Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chocoladefabriken Lindt Spruengli and Software Circle plc, you can compare the effects of market volatilities on Chocoladefabriken and Software Circle 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 Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Software Circle.

Diversification Opportunities for Chocoladefabriken and Software Circle

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chocoladefabriken and Software is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc 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 Spruengli are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Software Circle go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Software Circle

Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to generate 0.56 times more return on investment than Software Circle. However, Chocoladefabriken Lindt Spruengli is 1.77 times less risky than Software Circle. It trades about 0.13 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.03 per unit of risk. If you would invest  11,580,000  in Chocoladefabriken Lindt Spruengli on April 24, 2025 and sell it today you would earn a total of  1,175,900  from holding Chocoladefabriken Lindt Spruengli or generate 10.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.88%
ValuesDaily Returns

Chocoladefabriken Lindt Spruen  vs.  Software Circle plc

 Performance 
       Timeline  
Chocoladefabriken Lindt 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Spruengli are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chocoladefabriken may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Software Circle plc 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Software Circle is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chocoladefabriken and Software Circle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chocoladefabriken and Software Circle

The main advantage of trading using opposite Chocoladefabriken and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.
The idea behind Chocoladefabriken Lindt Spruengli and Software Circle plc 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 Stocks Directory module to find actively traded stocks across global markets.

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