Correlation Between Suntory Beverage and PREMIER FOODS

Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and PREMIER 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 Suntory Beverage and PREMIER FOODS 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 PREMIER FOODS, you can compare the effects of market volatilities on Suntory Beverage and PREMIER 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 Suntory Beverage with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and PREMIER FOODS.

Diversification Opportunities for Suntory Beverage and PREMIER FOODS

-0.11

Correlation Coefficient

Suntory Beverage  PREMIER FOODS

Good diversification

The 3 months correlation between Suntory and PREMIER is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and PREMIER FOODS go up and down completely randomly.

Pair Corralation between Suntory Beverage and PREMIER FOODS

Assuming the 90 days horizon Suntory Beverage Food is expected to generate 1.31 times more return on investment than PREMIER FOODS. However, Suntory Beverage is 1.31 times more volatile than PREMIER FOODS. It trades about -0.15 of its potential returns per unit of risk. PREMIER FOODS is currently generating about -0.22 per unit of risk. If you would invest  3,014  in Suntory Beverage Food on October 12, 2024 and sell it today you would lose (136.00) from holding Suntory Beverage Food or give up 4.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Suntory Beverage Food  vs.  PREMIER FOODS

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.

PREMIER FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PREMIER FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Suntory Beverage and PREMIER FOODS

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

The idea behind Suntory Beverage Food and PREMIER FOODS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.