Correlation Between BOSTON BEER and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER 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 BOSTON BEER and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOSTON BEER A and Thai Beverage Public, you can compare the effects of market volatilities on BOSTON BEER 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 BOSTON BEER with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Thai Beverage.
Diversification Opportunities for BOSTON BEER and Thai Beverage
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between BOSTON and Thai is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and BOSTON BEER 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 BOSTON BEER A 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 Public has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Thai Beverage go up and down completely randomly.
Pair Corralation between BOSTON BEER and Thai Beverage
Assuming the 90 days trading horizon BOSTON BEER A is expected to generate 0.63 times more return on investment than Thai Beverage. However, BOSTON BEER A is 1.6 times less risky than Thai Beverage. It trades about 0.13 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.01 per unit of risk. If you would invest 27,940 in BOSTON BEER A on August 30, 2024 and sell it today you would earn a total of 1,460 from holding BOSTON BEER A or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOSTON BEER A vs. Thai Beverage Public
Performance |
| Timeline |
| BOSTON BEER A |
| Thai Beverage Public |
BOSTON BEER and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Thai Beverage
The main advantage of trading using opposite BOSTON BEER and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER 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.| BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Superior Plus Corp | BOSTON BEER vs. SIVERS SEMICONDUCTORS AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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