Correlation Between Suntory Beverage and ELECTRONIC ARTS

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

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

Diversification Opportunities for Suntory Beverage and ELECTRONIC ARTS

-0.47

Correlation Coefficient

Suntory Beverage  ELECTRONIC ARTS

Very good diversification

The 3 months correlation between Suntory and ELECTRONIC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and Suntory 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 Suntory Beverage Food are associated (or correlated) with ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and ELECTRONIC ARTS go up and down completely randomly.

Pair Corralation between Suntory Beverage and ELECTRONIC ARTS

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the ELECTRONIC ARTS. In addition to that, Suntory Beverage is 1.31 times more volatile than ELECTRONIC ARTS. It trades about -0.07 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.12 per unit of volatility. If you would invest  12,964  in ELECTRONIC ARTS on October 8, 2024 and sell it today you would earn a total of  1,192  from holding ELECTRONIC ARTS or generate 9.19% return on investment over 90 days.

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

Suntory Beverage Food  vs.  ELECTRONIC ARTS

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

ELECTRONIC ARTS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELECTRONIC ARTS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ELECTRONIC ARTS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Suntory Beverage and ELECTRONIC ARTS

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

The idea behind Suntory Beverage Food and ELECTRONIC ARTS 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.