Correlation Between Fevertree Drinks and Eastinco Mining

Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Eastinco Mining 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 Eastinco Mining 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 Eastinco Mining Exploration, you can compare the effects of market volatilities on Fevertree Drinks and Eastinco Mining 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 Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Eastinco Mining.

Diversification Opportunities for Fevertree Drinks and Eastinco Mining

0.32

Correlation Coefficient

Fevertree Drinks  Eastinco Mining

Weak diversification

The 3 months correlation between Fevertree and Eastinco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl 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 Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Eastinco Mining go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Eastinco Mining

Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Eastinco Mining. In addition to that, Fevertree Drinks is 1.4 times more volatile than Eastinco Mining Exploration. It trades about -0.01 of its total potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.0 per unit of volatility. If you would invest  5,250  in Eastinco Mining Exploration on December 1, 2024 and sell it today you would lose (100.00) from holding Eastinco Mining Exploration or give up 1.9% of portfolio value over 90 days.

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

Fevertree Drinks Plc  vs.  Eastinco Mining Exploration

Fevertree Drinks Plc

Risk-Adjusted Performance

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 comparatively stable basic indicators, Fevertree Drinks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Eastinco Mining Expl

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eastinco Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fevertree Drinks and Eastinco Mining

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

The idea behind Fevertree Drinks Plc and Eastinco Mining Exploration 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.