Correlation Between Boston Beer and Corsair Gaming

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

Diversification Opportunities for Boston Beer and Corsair Gaming

0.62

Correlation Coefficient

Boston Beer  Corsair Gaming

Poor diversification

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

Pair Corralation between Boston Beer and Corsair Gaming

Assuming the 90 days trading horizon The Boston Beer is expected to generate 0.37 times more return on investment than Corsair Gaming. However, The Boston Beer is 2.74 times less risky than Corsair Gaming. It trades about -0.18 of its potential returns per unit of risk. Corsair Gaming is currently generating about -0.14 per unit of risk. If you would invest  29,960  in The Boston Beer on September 26, 2024 and sell it today you would lose (1,660) from holding The Boston Beer or give up 5.54% of portfolio value over 90 days.

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

The Boston Beer  vs.  Corsair Gaming

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 unsteady technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

Corsair Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and Corsair Gaming

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

The idea behind The Boston Beer and Corsair Gaming 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.