Correlation Between Eastroc Beverage and Great-Sun Foods

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

By analyzing existing cross correlation between Eastroc Beverage Group and Great Sun Foods Co, you can compare the effects of market volatilities on Eastroc Beverage and Great-Sun Foods 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 Eastroc Beverage with a short position of Great-Sun Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Great-Sun Foods.

Diversification Opportunities for Eastroc Beverage and Great-Sun Foods

-0.25

Correlation Coefficient

Eastroc Beverage  Great-Sun Foods

Very good diversification

The 3 months correlation between Eastroc and Great-Sun is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and Eastroc 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 Eastroc Beverage Group are associated (or correlated) with Great-Sun Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Great-Sun Foods go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Great-Sun Foods

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 0.81 times more return on investment than Great-Sun Foods. However, Eastroc Beverage Group is 1.23 times less risky than Great-Sun Foods. It trades about 0.02 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about -0.01 per unit of risk. If you would invest  22,094  in Eastroc Beverage Group on December 4, 2024 and sell it today you would earn a total of  209.00  from holding Eastroc Beverage Group or generate 0.95% return on investment over 90 days.

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

Eastroc Beverage Group  vs.  Great Sun Foods Co

Eastroc Beverage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eastroc Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great Sun Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Sun Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Great-Sun Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastroc Beverage and Great-Sun Foods

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

The idea behind Eastroc Beverage Group and Great Sun Foods 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.