Correlation Between National Beverage and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both National Beverage and THAI BEVERAGE 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 National Beverage and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and THAI BEVERAGE, you can compare the effects of market volatilities on National Beverage and THAI BEVERAGE 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 National Beverage with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and THAI BEVERAGE.
Diversification Opportunities for National Beverage and THAI BEVERAGE
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and THAI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and National Beverage 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 National Beverage Corp are associated (or correlated) with THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of National Beverage i.e., National Beverage and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between National Beverage and THAI BEVERAGE
Assuming the 90 days horizon National Beverage Corp is expected to generate 0.69 times more return on investment than THAI BEVERAGE. However, National Beverage Corp is 1.44 times less risky than THAI BEVERAGE. It trades about 0.2 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.06 per unit of risk. If you would invest 4,180 in National Beverage Corp on August 27, 2024 and sell it today you would earn a total of 320.00 from holding National Beverage Corp or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. THAI BEVERAGE
Performance |
| Timeline |
| National Beverage Corp |
| THAI BEVERAGE |
National Beverage and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and THAI BEVERAGE
The main advantage of trading using opposite National Beverage and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, THAI BEVERAGE 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 THAI BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.| National Beverage vs. FIREWEED METALS P | National Beverage vs. Kaiser Aluminum | National Beverage vs. PennyMac Mortgage Investment | National Beverage vs. Chuangs China Investments |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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