Correlation Between DICKER DATA and Fevertree Drinks

Can any of the company-specific risk be diversified away by investing in both DICKER DATA and Fevertree Drinks 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 DICKER DATA and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DICKER DATA LTD and Fevertree Drinks PLC, you can compare the effects of market volatilities on DICKER DATA and Fevertree Drinks 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 DICKER DATA with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKER DATA and Fevertree Drinks.

Diversification Opportunities for DICKER DATA and Fevertree Drinks

0.65

Correlation Coefficient

DICKER DATA  Fevertree Drinks

Poor diversification

The 3 months correlation between DICKER and Fevertree is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC and DICKER DATA 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 DICKER DATA LTD are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of DICKER DATA i.e., DICKER DATA and Fevertree Drinks go up and down completely randomly.

Pair Corralation between DICKER DATA and Fevertree Drinks

Assuming the 90 days horizon DICKER DATA LTD is expected to generate 0.94 times more return on investment than Fevertree Drinks. However, DICKER DATA LTD is 1.07 times less risky than Fevertree Drinks. It trades about -0.06 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.09 per unit of risk. If you would invest  529.00  in DICKER DATA LTD on September 20, 2024 and sell it today you would lose (41.00) from holding DICKER DATA LTD or give up 7.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DICKER DATA LTD  vs.  Fevertree Drinks PLC

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fevertree Drinks PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with DICKER DATA and Fevertree Drinks

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

The idea behind DICKER DATA LTD and Fevertree Drinks PLC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.