Correlation Between Suntory Beverage and Sekisui House

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

Diversification Opportunities for Suntory Beverage and Sekisui House

0.26

Correlation Coefficient

Suntory Beverage  Sekisui House

Modest diversification

The 3 months correlation between Suntory and Sekisui is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Sekisui House go up and down completely randomly.

Pair Corralation between Suntory Beverage and Sekisui House

Assuming the 90 days horizon Suntory Beverage Food is expected to generate 1.34 times more return on investment than Sekisui House. However, Suntory Beverage is 1.34 times more volatile than Sekisui House. It trades about -0.04 of its potential returns per unit of risk. Sekisui House is currently generating about -0.11 per unit of risk. If you would invest  3,052  in Suntory Beverage Food on December 21, 2024 and sell it today you would lose (144.00) from holding Suntory Beverage Food or give up 4.72% of portfolio value over 90 days.

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

Suntory Beverage Food  vs.  Sekisui House

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.

Sekisui House

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Suntory Beverage and Sekisui House

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

The idea behind Suntory Beverage Food and Sekisui House 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.