Correlation Between Sentronic International and Oceanic Beverages

Can any of the company-specific risk be diversified away by investing in both Sentronic International and Oceanic 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 Sentronic International and Oceanic Beverages into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sentronic International and Oceanic Beverages Co, you can compare the effects of market volatilities on Sentronic International and Oceanic 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 Sentronic International with a short position of Oceanic Beverages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentronic International and Oceanic Beverages.

Diversification Opportunities for Sentronic International and Oceanic Beverages

0.24

Correlation Coefficient

Sentronic International  Oceanic Beverages

Modest diversification

The 3 months correlation between Sentronic and Oceanic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sentronic International and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Sentronic International 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 Sentronic International are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Sentronic International i.e., Sentronic International and Oceanic Beverages go up and down completely randomly.

Pair Corralation between Sentronic International and Oceanic Beverages

Assuming the 90 days trading horizon Sentronic International is expected to under-perform the Oceanic Beverages. In addition to that, Sentronic International is 1.16 times more volatile than Oceanic Beverages Co. It trades about -0.21 of its total potential returns per unit of risk. Oceanic Beverages Co is currently generating about 0.11 per unit of volatility. If you would invest  1,240  in Oceanic Beverages Co on September 17, 2024 and sell it today you would earn a total of  60.00  from holding Oceanic Beverages Co or generate 4.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sentronic International  vs.  Oceanic Beverages Co

Sentronic International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentronic International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Oceanic Beverages

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sentronic International and Oceanic Beverages

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

The idea behind Sentronic International and Oceanic Beverages Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.