Correlation Between Suntory Beverage and MOUNT GIBSON

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

Diversification Opportunities for Suntory Beverage and MOUNT GIBSON

-0.11

Correlation Coefficient

Suntory Beverage  MOUNT GIBSON

Good diversification

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

Pair Corralation between Suntory Beverage and MOUNT GIBSON

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the MOUNT GIBSON. But the stock apears to be less risky and, when comparing its historical volatility, Suntory Beverage Food is 1.52 times less risky than MOUNT GIBSON. The stock trades about -0.04 of its potential returns per unit of risk. The MOUNT GIBSON IRON is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17.00  in MOUNT GIBSON IRON on December 21, 2024 and sell it today you would earn a total of  1.00  from holding MOUNT GIBSON IRON or generate 5.88% return on investment over 90 days.

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

Suntory Beverage Food  vs.  MOUNT GIBSON IRON

Suntory Beverage Food

Risk-Adjusted Performance

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 nearly stable basic indicators, Suntory Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MOUNT GIBSON IRON

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MOUNT GIBSON IRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, MOUNT GIBSON may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Suntory Beverage and MOUNT GIBSON

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

The idea behind Suntory Beverage Food and MOUNT GIBSON IRON 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.