Correlation Between IND+COMMBK CHINA and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both IND+COMMBK CHINA and BOSTON BEER 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 IND+COMMBK CHINA and BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and BOSTON BEER A , you can compare the effects of market volatilities on IND+COMMBK CHINA and BOSTON BEER 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 IND+COMMBK CHINA with a short position of BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of IND+COMMBK CHINA and BOSTON BEER.
Diversification Opportunities for IND+COMMBK CHINA and BOSTON BEER
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IND+COMMBK and BOSTON is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A and IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of IND+COMMBK CHINA i.e., IND+COMMBK CHINA and BOSTON BEER go up and down completely randomly.
Pair Corralation between IND+COMMBK CHINA and BOSTON BEER
Assuming the 90 days trading horizon INDCOMMBK CHINA ADR20 is expected to under-perform the BOSTON BEER. In addition to that, IND+COMMBK CHINA is 1.78 times more volatile than BOSTON BEER A . It trades about -0.06 of its total potential returns per unit of risk. BOSTON BEER A is currently generating about 0.27 per unit of volatility. If you would invest 26,740 in BOSTON BEER A on September 5, 2024 and sell it today you would earn a total of 2,900 from holding BOSTON BEER A or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. BOSTON BEER A
Performance |
| Timeline |
| INDCOMMBK CHINA ADR20 |
| BOSTON BEER A |
IND+COMMBK CHINA and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IND+COMMBK CHINA and BOSTON BEER
The main advantage of trading using opposite IND+COMMBK CHINA and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IND+COMMBK CHINA position performs unexpectedly, BOSTON BEER 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 BOSTON BEER will offset losses from the drop in BOSTON BEER's long position.| IND+COMMBK CHINA vs. BOSTON BEER A | IND+COMMBK CHINA vs. Benchmark Electronics | IND+COMMBK CHINA vs. UMC Electronics Co | IND+COMMBK CHINA vs. LPKF Laser Electronics |
| BOSTON BEER vs. BII Railway Transportation | BOSTON BEER vs. Fukuyama Transporting Co | BOSTON BEER vs. TEXAS ROADHOUSE | BOSTON BEER vs. Air Transport Services |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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