Correlation Between Continental Beverage and Generation Asia

Can any of the company-specific risk be diversified away by investing in both Continental Beverage and Generation Asia 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 Continental Beverage and Generation Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Continental Beverage Brands and Generation Asia I, you can compare the effects of market volatilities on Continental Beverage and Generation Asia 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 Continental Beverage with a short position of Generation Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Beverage and Generation Asia.

Diversification Opportunities for Continental Beverage and Generation Asia

0.0

Correlation Coefficient

Continental Beverage  Generation Asia

Pay attention - limited upside

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

Pair Corralation between Continental Beverage and Generation Asia

If you would invest (100.00) in Generation Asia I on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Generation Asia I or generate -100.0% return on investment over 90 days.

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

Continental Beverage Brands  vs.  Generation Asia I

Continental Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Continental Beverage Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Continental Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Generation Asia I

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generation Asia I has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Generation Asia is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Continental Beverage and Generation Asia

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

The idea behind Continental Beverage Brands and Generation Asia I 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.