Correlation Between BOSTON BEER and SVENSKA CELLULO

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

Diversification Opportunities for BOSTON BEER and SVENSKA CELLULO

-0.62

Correlation Coefficient

BOSTON BEER  SVENSKA CELLULO

Excellent diversification

The 3 months correlation between BOSTON and SVENSKA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between BOSTON BEER and SVENSKA CELLULO

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the SVENSKA CELLULO. In addition to that, BOSTON BEER is 1.52 times more volatile than SVENSKA CELLULO B . It trades about -0.27 of its total potential returns per unit of risk. SVENSKA CELLULO B is currently generating about 0.14 per unit of volatility. If you would invest  1,175  in SVENSKA CELLULO B on December 22, 2024 and sell it today you would earn a total of  122.00  from holding SVENSKA CELLULO B or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BOSTON BEER A   vs.  SVENSKA CELLULO B

BOSTON BEER A

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SVENSKA CELLULO B

Risk-Adjusted Performance

Good

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, SVENSKA CELLULO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BOSTON BEER and SVENSKA CELLULO

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

The idea behind BOSTON BEER A and SVENSKA CELLULO B 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.