Correlation Between National Beverage and INDIKA ENERGY

Can any of the company-specific risk be diversified away by investing in both National Beverage and INDIKA ENERGY 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 National Beverage and INDIKA ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Beverage Corp and INDIKA ENERGY, you can compare the effects of market volatilities on National Beverage and INDIKA ENERGY 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 National Beverage with a short position of INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and INDIKA ENERGY.

Diversification Opportunities for National Beverage and INDIKA ENERGY

-0.69

Correlation Coefficient

National Beverage  INDIKA ENERGY

Excellent diversification

The 3 months correlation between National and INDIKA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY and National Beverage 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 National Beverage Corp are associated (or correlated) with INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of National Beverage i.e., National Beverage and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between National Beverage and INDIKA ENERGY

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the INDIKA ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.09 times less risky than INDIKA ENERGY. The stock trades about -0.07 of its potential returns per unit of risk. The INDIKA ENERGY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.30  in INDIKA ENERGY on September 29, 2024 and sell it today you would earn a total of  1.20  from holding INDIKA ENERGY or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

National Beverage Corp  vs.  INDIKA ENERGY

National Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with National Beverage and INDIKA ENERGY

The main advantage of trading using opposite National Beverage and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.

The idea behind National Beverage Corp and INDIKA ENERGY 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.