Correlation Between Continental Beverage and UHF Logistics

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

Diversification Opportunities for Continental Beverage and UHF Logistics

-0.12

Correlation Coefficient

Continental Beverage  UHF Logistics

Good diversification

The 3 months correlation between Continental and UHF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Continental Beverage Brands and UHF Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UHF Logistics Group 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 UHF Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UHF Logistics Group has no effect on the direction of Continental Beverage i.e., Continental Beverage and UHF Logistics go up and down completely randomly.

Pair Corralation between Continental Beverage and UHF Logistics

Given the investment horizon of 90 days Continental Beverage Brands is expected to generate 5.51 times more return on investment than UHF Logistics. However, Continental Beverage is 5.51 times more volatile than UHF Logistics Group. It trades about 0.19 of its potential returns per unit of risk. UHF Logistics Group is currently generating about 0.11 per unit of risk. If you would invest  18.00  in Continental Beverage Brands on September 5, 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 Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Continental Beverage Brands  vs.  UHF Logistics Group

Continental Beverage

Risk-Adjusted Performance

14 of 100

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.

UHF Logistics Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UHF Logistics Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, UHF Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Continental Beverage and UHF Logistics

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

The idea behind Continental Beverage Brands and UHF Logistics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.