Correlation Between Auction Technology and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Fevertree Drinks 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 Auction Technology and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Fevertree Drinks Plc, you can compare the effects of market volatilities on Auction Technology and Fevertree Drinks 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 Auction Technology with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Fevertree Drinks.
Diversification Opportunities for Auction Technology and Fevertree Drinks
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Auction and Fevertree is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Auction Technology 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 Auction Technology Group are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Auction Technology i.e., Auction Technology and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Auction Technology and Fevertree Drinks
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 1.26 times more return on investment than Fevertree Drinks. However, Auction Technology is 1.26 times more volatile than Fevertree Drinks Plc. It trades about -0.02 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.03 per unit of risk. If you would invest 77,700 in Auction Technology Group on August 30, 2024 and sell it today you would lose (27,000) from holding Auction Technology Group or give up 34.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Auction Technology Group vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Auction Technology |
| Fevertree Drinks Plc |
Auction Technology and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Fevertree Drinks
The main advantage of trading using opposite Auction Technology and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Hyundai Motor | Auction Technology vs. Toyota Motor Corp |
| Fevertree Drinks vs. Auction Technology Group | Fevertree Drinks vs. Infrastrutture Wireless Italiane | Fevertree Drinks vs. Take Two Interactive Software | Fevertree Drinks vs. American Homes 4 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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