Correlation Between Boston Beer and SERI INDUSTRIAL

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

Diversification Opportunities for Boston Beer and SERI INDUSTRIAL

-0.24

Correlation Coefficient

Boston Beer  SERI INDUSTRIAL

Very good diversification

The 3 months correlation between Boston and SERI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of Boston Beer i.e., Boston Beer and SERI INDUSTRIAL go up and down completely randomly.

Pair Corralation between Boston Beer and SERI INDUSTRIAL

Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the SERI INDUSTRIAL. But the stock apears to be less risky and, when comparing its historical volatility, The Boston Beer is 1.73 times less risky than SERI INDUSTRIAL. The stock trades about -0.26 of its potential returns per unit of risk. The SERI INDUSTRIAL EO is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  273.00  in SERI INDUSTRIAL EO on October 10, 2024 and sell it today you would lose (20.00) from holding SERI INDUSTRIAL EO or give up 7.33% of portfolio value over 90 days.

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

The Boston Beer  vs.  SERI INDUSTRIAL EO

Boston Beer

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Boston Beer and SERI INDUSTRIAL

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

The idea behind The Boston Beer and SERI INDUSTRIAL EO 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..