Correlation Between Suntory Beverage and Aqua America
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and Aqua America 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 Suntory Beverage and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and Aqua America, you can compare the effects of market volatilities on Suntory Beverage and Aqua America 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 Suntory Beverage with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and Aqua America.
Diversification Opportunities for Suntory Beverage and Aqua America
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Suntory and Aqua is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and Suntory 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 Suntory Beverage Food are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Aqua America go up and down completely randomly.
Pair Corralation between Suntory Beverage and Aqua America
Assuming the 90 days horizon Suntory Beverage Food is expected to generate 1.16 times more return on investment than Aqua America. However, Suntory Beverage is 1.16 times more volatile than Aqua America. It trades about 0.0 of its potential returns per unit of risk. Aqua America is currently generating about -0.26 per unit of risk. If you would invest 3,078 in Suntory Beverage Food on October 9, 2024 and sell it today you would lose (2.00) from holding Suntory Beverage Food or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suntory Beverage Food vs. Aqua America
Performance |
| Timeline |
| Suntory Beverage Food |
| Aqua America |
Suntory Beverage and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and Aqua America
The main advantage of trading using opposite Suntory Beverage and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| Suntory Beverage vs. HEINEKEN SP ADR | Suntory Beverage vs. Heineken Holding NV | Suntory Beverage vs. Superior Plus Corp | Suntory Beverage vs. NMI Holdings |
| Aqua America vs. Granite Construction | Aqua America vs. AGRICULTBK HADR25 YC | Aqua America vs. Tianjin Capital Environmental | Aqua America vs. Federal Agricultural Mortgage |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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