Correlation Between SFL and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both SFL 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 SFL and Suntory Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Suntory Beverage Food, you can compare the effects of market volatilities on SFL 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 SFL with a short position of Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Suntory Beverage.
Diversification Opportunities for SFL and Suntory Beverage
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SFL and Suntory is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. 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 SFL 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 SFL Corporation 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 SFL i.e., SFL and Suntory Beverage go up and down completely randomly.
Pair Corralation between SFL and Suntory Beverage
Considering the 90-day investment horizon SFL Corporation is expected to generate 1.01 times more return on investment than Suntory Beverage. However, SFL is 1.01 times more volatile than Suntory Beverage Food. It trades about 0.04 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about 0.01 per unit of risk. If you would invest 809.00 in SFL Corporation on September 3, 2024 and sell it today you would earn a total of 236.00 from holding SFL Corporation or generate 29.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFL Corp. vs. Suntory Beverage Food
Performance |
| Timeline |
| SFL Corporation |
| Suntory Beverage Food |
SFL and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Suntory Beverage
The main advantage of trading using opposite SFL and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL 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.The idea behind SFL Corporation and Suntory Beverage Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Suntory Beverage vs. Secom Co Ltd | Suntory Beverage vs. Mitsubishi Estate Co | Suntory Beverage vs. Shimano Inc ADR | Suntory Beverage vs. Sumitomo Chemical Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |