Correlation Between SBM HOLDINGS and QUALITY BEVERAGES
Can any of the company-specific risk be diversified away by investing in both SBM HOLDINGS and QUALITY BEVERAGES 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 SBM HOLDINGS and QUALITY BEVERAGES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM HOLDINGS LTD and QUALITY BEVERAGES LTD, you can compare the effects of market volatilities on SBM HOLDINGS and QUALITY BEVERAGES 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 SBM HOLDINGS with a short position of QUALITY BEVERAGES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM HOLDINGS and QUALITY BEVERAGES.
Diversification Opportunities for SBM HOLDINGS and QUALITY BEVERAGES
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBM and QUALITY is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SBM HOLDINGS LTD and QUALITY BEVERAGES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALITY BEVERAGES LTD and SBM HOLDINGS 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 SBM HOLDINGS LTD are associated (or correlated) with QUALITY BEVERAGES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALITY BEVERAGES LTD has no effect on the direction of SBM HOLDINGS i.e., SBM HOLDINGS and QUALITY BEVERAGES go up and down completely randomly.
Pair Corralation between SBM HOLDINGS and QUALITY BEVERAGES
Assuming the 90 days trading horizon SBM HOLDINGS LTD is expected to under-perform the QUALITY BEVERAGES. In addition to that, SBM HOLDINGS is 2.0 times more volatile than QUALITY BEVERAGES LTD. It trades about -0.19 of its total potential returns per unit of risk. QUALITY BEVERAGES LTD is currently generating about 0.3 per unit of volatility. If you would invest 1,050 in QUALITY BEVERAGES LTD on August 28, 2024 and sell it today you would earn a total of 100.00 from holding QUALITY BEVERAGES LTD or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM HOLDINGS LTD vs. QUALITY BEVERAGES LTD
Performance |
| Timeline |
| SBM HOLDINGS LTD |
| QUALITY BEVERAGES LTD |
SBM HOLDINGS and QUALITY BEVERAGES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM HOLDINGS and QUALITY BEVERAGES
The main advantage of trading using opposite SBM HOLDINGS and QUALITY BEVERAGES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM HOLDINGS position performs unexpectedly, QUALITY BEVERAGES 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 QUALITY BEVERAGES will offset losses from the drop in QUALITY BEVERAGES's long position.| SBM HOLDINGS vs. QUALITY BEVERAGES LTD | SBM HOLDINGS vs. PHOENIX INVESTMENT PANY | SBM HOLDINGS vs. FINCORP INVESTMENT LTD |
| QUALITY BEVERAGES vs. MCB GROUP LTD | QUALITY BEVERAGES vs. LOTTOTECH LTD | QUALITY BEVERAGES vs. NEW MAURITIUS HOTELS | QUALITY BEVERAGES vs. MIWA SUGAR 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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