Correlation Between Big Rock and Ceres Global

Can any of the company-specific risk be diversified away by investing in both Big Rock and Ceres Global 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 Big Rock and Ceres Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big Rock Brewery and Ceres Global Ag, you can compare the effects of market volatilities on Big Rock and Ceres Global 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 Big Rock with a short position of Ceres Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Ceres Global.

Diversification Opportunities for Big Rock and Ceres Global

0.15

Correlation Coefficient

Big Rock  Ceres Global

Average diversification

The 3 months correlation between Big and Ceres is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Ceres Global Ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Global Ag and Big Rock 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 Big Rock Brewery are associated (or correlated) with Ceres Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Global Ag has no effect on the direction of Big Rock i.e., Big Rock and Ceres Global go up and down completely randomly.

Pair Corralation between Big Rock and Ceres Global

Assuming the 90 days horizon Big Rock Brewery is expected to generate 4.56 times more return on investment than Ceres Global. However, Big Rock is 4.56 times more volatile than Ceres Global Ag. It trades about 0.04 of its potential returns per unit of risk. Ceres Global Ag is currently generating about -0.21 per unit of risk. If you would invest  108.00  in Big Rock Brewery on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Big Rock Brewery or generate 3.7% return on investment over 90 days.

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

Big Rock Brewery  vs.  Ceres Global Ag

Big Rock Brewery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Rock Brewery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Big Rock displayed solid returns over the last few months and may actually be approaching a breakup point.

Ceres Global Ag

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ceres Global Ag has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Big Rock and Ceres Global

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

The idea behind Big Rock Brewery and Ceres Global Ag 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.