Correlation Between Boston Beer and SYSTEMAIR

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

Diversification Opportunities for Boston Beer and SYSTEMAIR

0.39

Correlation Coefficient

Boston Beer  SYSTEMAIR

Weak diversification

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

Pair Corralation between Boston Beer and SYSTEMAIR

Assuming the 90 days trading horizon Boston Beer is expected to generate 16.72 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, The Boston Beer is 1.37 times less risky than SYSTEMAIR. It trades about 0.0 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  420.00  in SYSTEMAIR AB on September 26, 2024 and sell it today you would earn a total of  348.00  from holding SYSTEMAIR AB or generate 82.86% 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.  SYSTEMAIR AB

Boston Beer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 11 (%) 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.

SYSTEMAIR AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boston Beer and SYSTEMAIR

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

The idea behind The Boston Beer and SYSTEMAIR AB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.