Correlation Between REGAL ASIAN and Boston Beer

Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN 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 REGAL ASIAN and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and The Boston Beer, you can compare the effects of market volatilities on REGAL ASIAN 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 REGAL ASIAN with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Boston Beer.

Diversification Opportunities for REGAL ASIAN and Boston Beer

-0.25

Correlation Coefficient

REGAL ASIAN  Boston Beer

Very good diversification

The 3 months correlation between REGAL and Boston is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS 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 has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Boston Beer go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Boston Beer

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Boston Beer. In addition to that, REGAL ASIAN is 1.03 times more volatile than The Boston Beer. It trades about -0.1 of its total potential returns per unit of risk. The Boston Beer is currently generating about 0.12 per unit of volatility. If you would invest  25,840  in The Boston Beer on September 30, 2024 and sell it today you would earn a total of  2,920  from holding The Boston Beer or generate 11.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

REGAL ASIAN INVESTMENTS  vs.  The Boston Beer

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Boston Beer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with REGAL ASIAN and Boston Beer

The main advantage of trading using opposite REGAL ASIAN and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN 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.

The idea behind REGAL ASIAN INVESTMENTS and The Boston Beer 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.