Correlation Between BOSTON BEER and THRACE PLASTICS

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

Diversification Opportunities for BOSTON BEER and THRACE PLASTICS

-0.66

Correlation Coefficient

BOSTON BEER  THRACE PLASTICS

Excellent diversification

The 3 months correlation between BOSTON and THRACE is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between BOSTON BEER and THRACE PLASTICS

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the THRACE PLASTICS. In addition to that, BOSTON BEER is 1.15 times more volatile than THRACE PLASTICS. It trades about -0.26 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.01 per unit of volatility. If you would invest  387.00  in THRACE PLASTICS on December 2, 2024 and sell it today you would earn a total of  0.00  from holding THRACE PLASTICS or generate 0.0% return on investment over 90 days.

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

BOSTON BEER A   vs.  THRACE PLASTICS

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 fragile 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.

THRACE PLASTICS

Risk-Adjusted Performance

Very Weak

Over the last 90 days THRACE PLASTICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BOSTON BEER and THRACE PLASTICS

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

The idea behind BOSTON BEER A and THRACE PLASTICS 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.