Correlation Between Fevertree Drinks and Ajax Resources

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

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

Diversification Opportunities for Fevertree Drinks and Ajax Resources

-0.76

Correlation Coefficient

Fevertree Drinks  Ajax Resources

Pay attention - limited upside

The 3 months correlation between Fevertree and Ajax is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Ajax Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajax Resources PLC and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Ajax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajax Resources PLC has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Ajax Resources go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Ajax Resources

If you would invest  300.00  in Ajax Resources PLC on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Ajax Resources PLC or generate 0.0% return on investment over 90 days.

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

Fevertree Drinks Plc  vs.  Ajax Resources PLC

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 unsteady 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.

Ajax Resources PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ajax Resources PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ajax Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fevertree Drinks and Ajax Resources

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

The idea behind Fevertree Drinks Plc and Ajax Resources 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.