Correlation Between Continental Beverage and Premier Products

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

Diversification Opportunities for Continental Beverage and Premier Products

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Continental Beverage and Premier Products

If you would invest  18.00  in Continental Beverage Brands on September 6, 2024 and sell it today you would earn a total of  57.00  from holding Continental Beverage Brands or generate 316.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Continental Beverage Brands  vs.  Premier Products Group

 Performance 
       Timeline  
Continental Beverage 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Continental Beverage Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Continental Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.
Premier Products 

Risk-Adjusted Performance

0 of 100

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

Continental Beverage and Premier Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Continental Beverage and Premier Products

The main advantage of trading using opposite Continental Beverage and Premier Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Beverage position performs unexpectedly, Premier Products 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 Premier Products will offset losses from the drop in Premier Products' long position.
The idea behind Continental Beverage Brands and Premier Products Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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