Correlation Between Alkame Holdings and National Beverage

Can any of the company-specific risk be diversified away by investing in both Alkame Holdings and National Beverage 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 Alkame Holdings and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkame Holdings and National Beverage Corp, you can compare the effects of market volatilities on Alkame Holdings and National Beverage 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 Alkame Holdings with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkame Holdings and National Beverage.

Diversification Opportunities for Alkame Holdings and National Beverage

0.18

Correlation Coefficient

Alkame Holdings  National Beverage

Average diversification

The 3 months correlation between Alkame and National is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alkame Holdings and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Alkame Holdings 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 Alkame Holdings are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Alkame Holdings i.e., Alkame Holdings and National Beverage go up and down completely randomly.

Pair Corralation between Alkame Holdings and National Beverage

Given the investment horizon of 90 days Alkame Holdings is expected to generate 81.32 times more return on investment than National Beverage. However, Alkame Holdings is 81.32 times more volatile than National Beverage Corp. It trades about 0.12 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.23 per unit of risk. If you would invest  0.01  in Alkame Holdings on November 30, 2024 and sell it today you would earn a total of  0.00  from holding Alkame Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Alkame Holdings  vs.  National Beverage Corp

Alkame Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alkame Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward-looking signals, Alkame Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

National Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alkame Holdings and National Beverage

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

The idea behind Alkame Holdings and National Beverage Corp 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.