Correlation Between Aqua America and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both Aqua America and Suntory 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 Aqua America and Suntory Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua America and Suntory Beverage Food, you can compare the effects of market volatilities on Aqua America and Suntory 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 Aqua America with a short position of Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Suntory Beverage.
Diversification Opportunities for Aqua America and Suntory Beverage
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqua and Suntory is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food and Aqua America 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 Aqua America are associated (or correlated) with Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of Aqua America i.e., Aqua America and Suntory Beverage go up and down completely randomly.
Pair Corralation between Aqua America and Suntory Beverage
Assuming the 90 days trading horizon Aqua America is expected to generate 0.67 times more return on investment than Suntory Beverage. However, Aqua America is 1.48 times less risky than Suntory Beverage. It trades about -0.17 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.21 per unit of risk. If you would invest 3,463 in Aqua America on October 23, 2024 and sell it today you would lose (113.00) from holding Aqua America or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Aqua America vs. Suntory Beverage Food
Performance |
| Timeline |
| Aqua America |
| Suntory Beverage Food |
Aqua America and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua America and Suntory Beverage
The main advantage of trading using opposite Aqua America and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua America position performs unexpectedly, Suntory 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 Suntory Beverage will offset losses from the drop in Suntory Beverage's long position.| Aqua America vs. Ryanair Holdings plc | Aqua America vs. Games Workshop Group | Aqua America vs. CONTAGIOUS GAMING INC | Aqua America vs. FRACTAL GAMING GROUP |
| Suntory Beverage vs. FOMECONMEXSAB DCV UTS | Suntory Beverage vs. HEINEKEN SP ADR | Suntory Beverage vs. Ambev SA | Suntory Beverage vs. Carlsberg AS |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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