Correlation Between Suntory Beverage and SPORTING

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

Diversification Opportunities for Suntory Beverage and SPORTING

-0.67

Correlation Coefficient

Suntory Beverage  SPORTING

Excellent diversification

The 3 months correlation between Suntory and SPORTING is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and SPORTING go up and down completely randomly.

Pair Corralation between Suntory Beverage and SPORTING

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the SPORTING. In addition to that, Suntory Beverage is 1.53 times more volatile than SPORTING. It trades about -0.08 of its total potential returns per unit of risk. SPORTING is currently generating about 0.11 per unit of volatility. If you would invest  98.00  in SPORTING on September 12, 2024 and sell it today you would earn a total of  8.00  from holding SPORTING or generate 8.16% 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.  SPORTING

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.

SPORTING

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPORTING are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SPORTING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Suntory Beverage and SPORTING

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

The idea behind Suntory Beverage Food and SPORTING 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.