Correlation Between BOSTON BEER and CEOTRONICS (CEKSG)

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and CEOTRONICS (CEKSG) 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 BOSTON BEER and CEOTRONICS (CEKSG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOSTON BEER A and CEOTRONICS, you can compare the effects of market volatilities on BOSTON BEER and CEOTRONICS (CEKSG) 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 BOSTON BEER with a short position of CEOTRONICS (CEKSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and CEOTRONICS (CEKSG).

Diversification Opportunities for BOSTON BEER and CEOTRONICS (CEKSG)

0.2

Correlation Coefficient

BOSTON BEER  CEOTRONICS (CEKSG)

Modest diversification

The 3 months correlation between BOSTON and CEOTRONICS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS (CEKSG) and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with CEOTRONICS (CEKSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS (CEKSG) has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and CEOTRONICS (CEKSG) go up and down completely randomly.

Pair Corralation between BOSTON BEER and CEOTRONICS (CEKSG)

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the CEOTRONICS (CEKSG). But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.74 times less risky than CEOTRONICS (CEKSG). The stock trades about -0.09 of its potential returns per unit of risk. The CEOTRONICS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  525.00  in CEOTRONICS on October 23, 2024 and sell it today you would earn a total of  75.00  from holding CEOTRONICS or generate 14.29% return on investment over 90 days.

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

BOSTON BEER A   vs.  CEOTRONICS

BOSTON BEER A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CEOTRONICS (CEKSG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOSTON BEER and CEOTRONICS (CEKSG)

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

The idea behind BOSTON BEER A and CEOTRONICS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.