Correlation Between Big Rock and Mamas Creations

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

Diversification Opportunities for Big Rock and Mamas Creations

0.0

Correlation Coefficient

Big Rock  Mamas Creations

Pay attention - limited upside

The 3 months correlation between Big and Mamas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Big Rock i.e., Big Rock and Mamas Creations go up and down completely randomly.

Pair Corralation between Big Rock and Mamas Creations

If you would invest (100.00) in Big Rock Brewery on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Big Rock Brewery or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Big Rock Brewery  vs.  Mamas Creations

Big Rock Brewery

Risk-Adjusted Performance

Very Weak

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

Mamas Creations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Big Rock and Mamas Creations

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

The idea behind Big Rock Brewery and Mamas Creations 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 Transaction History module to view history of all your transactions and understand their impact on performance.