Correlation Between Suntory Beverage and PG E

Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and PG E 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 PG E 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 PG E P6, you can compare the effects of market volatilities on Suntory Beverage and PG E 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 PG E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and PG E.

Diversification Opportunities for Suntory Beverage and PG E

-0.63

Correlation Coefficient

Suntory Beverage  PG E

Excellent diversification

The 3 months correlation between Suntory and PCG6 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and PG E P6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PG E P6 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 PG E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PG E P6 has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and PG E go up and down completely randomly.

Pair Corralation between Suntory Beverage and PG E

Assuming the 90 days horizon Suntory Beverage is expected to generate 8.97 times less return on investment than PG E. In addition to that, Suntory Beverage is 1.07 times more volatile than PG E P6. It trades about 0.0 of its total potential returns per unit of risk. PG E P6 is currently generating about 0.05 per unit of volatility. If you would invest  1,603  in PG E P6 on October 4, 2024 and sell it today you would earn a total of  537.00  from holding PG E P6 or generate 33.5% return on investment over 90 days.

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

Suntory Beverage Food  vs.  PG E P6

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.

PG E P6

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PG E P6 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PG E is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Suntory Beverage and PG E

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

The idea behind Suntory Beverage Food and PG E P6 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.