Correlation Between Boston Beer and CHRYSALIS INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both Boston Beer and CHRYSALIS INVESTMENTS 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 CHRYSALIS INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boston Beer and CHRYSALIS INVESTMENTS LTD, you can compare the effects of market volatilities on Boston Beer and CHRYSALIS INVESTMENTS 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 CHRYSALIS INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and CHRYSALIS INVESTMENTS.

Diversification Opportunities for Boston Beer and CHRYSALIS INVESTMENTS

0.39

Correlation Coefficient

Boston Beer  CHRYSALIS INVESTMENTS

Weak diversification

The 3 months correlation between Boston and CHRYSALIS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and CHRYSALIS INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRYSALIS INVESTMENTS LTD 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 The Boston Beer are associated (or correlated) with CHRYSALIS INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRYSALIS INVESTMENTS LTD has no effect on the direction of Boston Beer i.e., Boston Beer and CHRYSALIS INVESTMENTS go up and down completely randomly.

Pair Corralation between Boston Beer and CHRYSALIS INVESTMENTS

Assuming the 90 days trading horizon Boston Beer is expected to generate 1.12 times less return on investment than CHRYSALIS INVESTMENTS. But when comparing it to its historical volatility, The Boston Beer is 1.01 times less risky than CHRYSALIS INVESTMENTS. It trades about 0.14 of its potential returns per unit of risk. CHRYSALIS INVESTMENTS LTD is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  109.00  in CHRYSALIS INVESTMENTS LTD on October 8, 2024 and sell it today you would earn a total of  17.00  from holding CHRYSALIS INVESTMENTS LTD or generate 15.6% return on investment over 90 days.

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

The Boston Beer  vs.  CHRYSALIS INVESTMENTS LTD

Boston Beer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

CHRYSALIS INVESTMENTS LTD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHRYSALIS INVESTMENTS LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CHRYSALIS INVESTMENTS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and CHRYSALIS INVESTMENTS

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

The idea behind The Boston Beer and CHRYSALIS INVESTMENTS LTD 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.