Correlation Between Standard Foods and Oceanic Beverages
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Oceanic Beverages 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 Standard Foods and Oceanic Beverages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Oceanic Beverages Co, you can compare the effects of market volatilities on Standard Foods and Oceanic Beverages 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 Standard Foods with a short position of Oceanic Beverages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Oceanic Beverages.
Diversification Opportunities for Standard Foods and Oceanic Beverages
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Standard and Oceanic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Standard Foods i.e., Standard Foods and Oceanic Beverages go up and down completely randomly.
Pair Corralation between Standard Foods and Oceanic Beverages
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Oceanic Beverages. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 2.42 times less risky than Oceanic Beverages. The stock trades about -0.01 of its potential returns per unit of risk. The Oceanic Beverages Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 749.00 in Oceanic Beverages Co on September 3, 2024 and sell it today you would earn a total of 451.00 from holding Oceanic Beverages Co or generate 60.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Oceanic Beverages Co
Performance |
| Timeline |
| Standard Foods Corp |
| Oceanic Beverages |
Standard Foods and Oceanic Beverages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Oceanic Beverages
The main advantage of trading using opposite Standard Foods and Oceanic Beverages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Oceanic Beverages 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 Oceanic Beverages will offset losses from the drop in Oceanic Beverages' long position.| Standard Foods vs. TTET Union Corp | Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Charoen Pokphand Enterprise |
| Oceanic Beverages vs. Standard Foods Corp | Oceanic Beverages vs. TTET Union Corp | Oceanic Beverages vs. Uni President Enterprises Corp | Oceanic Beverages vs. Charoen Pokphand Enterprise |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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