Correlation Between Chocoladefabriken and Selective Insurance

Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken and Selective Insurance 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 Selective Insurance 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 Selective Insurance Group, you can compare the effects of market volatilities on Chocoladefabriken and Selective Insurance 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 Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Selective Insurance.

Diversification Opportunities for Chocoladefabriken and Selective Insurance

-0.41

Correlation Coefficient

Chocoladefabriken  Selective Insurance

Very good diversification

The 3 months correlation between Chocoladefabriken and Selective is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Sprngl and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance 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 Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Selective Insurance go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Selective Insurance

Assuming the 90 days trading horizon Chocoladefabriken Lindt Sprngli is expected to generate 9.23 times more return on investment than Selective Insurance. However, Chocoladefabriken is 9.23 times more volatile than Selective Insurance Group. It trades about 0.14 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.04 per unit of risk. If you would invest  631,500  in Chocoladefabriken Lindt Sprngli on April 24, 2025 and sell it today you would earn a total of  828,500  from holding Chocoladefabriken Lindt Sprngli or generate 131.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Chocoladefabriken Lindt Sprngl  vs.  Selective Insurance Group

Chocoladefabriken Lindt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Sprngli are ranked lower than 11 (%) 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.

Selective Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selective Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Selective Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chocoladefabriken and Selective Insurance

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

The idea behind Chocoladefabriken Lindt Sprngli and Selective Insurance Group 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.