Correlation Between Suntory Beverage and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on Suntory Beverage and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and STORE ELECTRONIC.
Diversification Opportunities for Suntory Beverage and STORE ELECTRONIC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suntory and STORE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between Suntory Beverage and STORE ELECTRONIC
Assuming the 90 days horizon Suntory Beverage is expected to generate 10.32 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, Suntory Beverage Food is 2.82 times less risky than STORE ELECTRONIC. It trades about 0.01 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,751 in STORE ELECTRONIC on September 4, 2024 and sell it today you would earn a total of 1,329 from holding STORE ELECTRONIC or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Suntory Beverage Food vs. STORE ELECTRONIC
Performance |
| Timeline |
| Suntory Beverage Food |
| STORE ELECTRONIC |
Suntory Beverage and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and STORE ELECTRONIC
The main advantage of trading using opposite Suntory Beverage and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| Suntory Beverage vs. Tsingtao Brewery | Suntory Beverage vs. Asahi Group Holdings | Suntory Beverage vs. Kirin Holdings |
| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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