Correlation Between Boston Beer and DFDS AS

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

Diversification Opportunities for Boston Beer and DFDS AS

-0.88

Correlation Coefficient

Boston Beer  DFDS AS

Pay attention - limited upside

The 3 months correlation between Boston and DFDS is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS AS 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 DFDS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS AS has no effect on the direction of Boston Beer i.e., Boston Beer and DFDS AS go up and down completely randomly.

Pair Corralation between Boston Beer and DFDS AS

Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.59 times more return on investment than DFDS AS. However, The Boston Beer is 1.7 times less risky than DFDS AS. It trades about 0.1 of its potential returns per unit of risk. DFDS AS is currently generating about -0.18 per unit of risk. If you would invest  27,240  in The Boston Beer on September 22, 2024 and sell it today you would earn a total of  1,680  from holding The Boston Beer or generate 6.17% return on investment over 90 days.

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

The Boston Beer  vs.  DFDS AS

Boston Beer

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Boston Beer and DFDS AS

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

The idea behind The Boston Beer and DFDS AS 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 Global Correlations module to find global opportunities by holding instruments from different markets.