Correlation Between Chr Hansen and Diageo PLC

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

By analyzing existing cross correlation between Chr Hansen Holding and Diageo PLC ADR, you can compare the effects of market volatilities on Chr Hansen and Diageo PLC 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 Chr Hansen with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chr Hansen and Diageo PLC.

Diversification Opportunities for Chr Hansen and Diageo PLC

-0.08

Correlation Coefficient

Chr Hansen  Diageo PLC

Good diversification

The 3 months correlation between Chr and Diageo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chr Hansen Holding and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Chr Hansen 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 Chr Hansen Holding are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Chr Hansen i.e., Chr Hansen and Diageo PLC go up and down completely randomly.

Pair Corralation between Chr Hansen and Diageo PLC

If you would invest  7,930  in Chr Hansen Holding on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Chr Hansen Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Chr Hansen Holding  vs.  Diageo PLC ADR

Chr Hansen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Diageo PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Chr Hansen and Diageo PLC

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

The idea behind Chr Hansen Holding and Diageo PLC ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.