Correlation Between Croda International and Chocoladefabriken

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

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

Diversification Opportunities for Croda International and Chocoladefabriken

0.87

Correlation Coefficient

Croda International  Chocoladefabriken

Very poor diversification

The 3 months correlation between Croda and Chocoladefabriken is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Croda International 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 Croda International 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 Croda International 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 Croda International i.e., Croda International and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Croda International and Chocoladefabriken

Assuming the 90 days trading horizon Croda International Plc is expected to under-perform the Chocoladefabriken. But the stock apears to be less risky and, when comparing its historical volatility, Croda International Plc is 2.22 times less risky than Chocoladefabriken. The stock trades about -0.21 of its potential returns per unit of risk. The Chocoladefabriken Lindt Spruengli is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,900,000  in Chocoladefabriken Lindt Spruengli on April 11, 2025 and sell it today you would earn a total of  100,000  from holding Chocoladefabriken Lindt Spruengli or generate 0.78% return on investment over 90 days.

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

Croda International Plc  vs.  Chocoladefabriken Lindt Spruen

Croda International Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Croda International Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Croda International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Spruengli are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chocoladefabriken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Croda International and Chocoladefabriken

The main advantage of trading using opposite Croda International and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croda International 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.

The idea behind Croda International Plc and Chocoladefabriken Lindt Spruengli 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.