Correlation Between CHAMPION BREWERIES and SECURE ELECTRONIC

Can any of the company-specific risk be diversified away by investing in both CHAMPION BREWERIES and SECURE ELECTRONIC 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 CHAMPION BREWERIES and SECURE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHAMPION BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY, you can compare the effects of market volatilities on CHAMPION BREWERIES and SECURE ELECTRONIC 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 CHAMPION BREWERIES with a short position of SECURE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION BREWERIES and SECURE ELECTRONIC.

Diversification Opportunities for CHAMPION BREWERIES and SECURE ELECTRONIC

-0.51

Correlation Coefficient

CHAMPION BREWERIES  SECURE ELECTRONIC

Excellent diversification

The 3 months correlation between CHAMPION and SECURE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURE ELECTRONIC and CHAMPION BREWERIES 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 CHAMPION BREWERIES PLC are associated (or correlated) with SECURE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURE ELECTRONIC has no effect on the direction of CHAMPION BREWERIES i.e., CHAMPION BREWERIES and SECURE ELECTRONIC go up and down completely randomly.

Pair Corralation between CHAMPION BREWERIES and SECURE ELECTRONIC

Assuming the 90 days trading horizon CHAMPION BREWERIES PLC is expected to generate 0.71 times more return on investment than SECURE ELECTRONIC. However, CHAMPION BREWERIES PLC is 1.41 times less risky than SECURE ELECTRONIC. It trades about 0.11 of its potential returns per unit of risk. SECURE ELECTRONIC TECHNOLOGY is currently generating about -0.06 per unit of risk. If you would invest  320.00  in CHAMPION BREWERIES PLC on September 15, 2024 and sell it today you would earn a total of  70.00  from holding CHAMPION BREWERIES PLC or generate 21.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CHAMPION BREWERIES PLC  vs.  SECURE ELECTRONIC TECHNOLOGY

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION BREWERIES PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, CHAMPION BREWERIES displayed solid returns over the last few months and may actually be approaching a breakup point.

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CHAMPION BREWERIES and SECURE ELECTRONIC

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

The idea behind CHAMPION BREWERIES PLC and SECURE ELECTRONIC TECHNOLOGY 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.