Correlation Between National Beverage and Arkema SA

Can any of the company-specific risk be diversified away by investing in both National Beverage and Arkema SA 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 National Beverage and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Beverage Corp and Arkema SA, you can compare the effects of market volatilities on National Beverage and Arkema SA 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 National Beverage with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Arkema SA.

Diversification Opportunities for National Beverage and Arkema SA

0.3

Correlation Coefficient

National Beverage  Arkema SA

Weak diversification

The 3 months correlation between National and Arkema is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and National 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 National Beverage Corp are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of National Beverage i.e., National Beverage and Arkema SA go up and down completely randomly.

Pair Corralation between National Beverage and Arkema SA

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Arkema SA. In addition to that, National Beverage is 1.49 times more volatile than Arkema SA. It trades about -0.22 of its total potential returns per unit of risk. Arkema SA is currently generating about 0.15 per unit of volatility. If you would invest  7,592  in Arkema SA on December 2, 2024 and sell it today you would earn a total of  473.00  from holding Arkema SA or generate 6.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.57%
Values	Daily Returns

National Beverage Corp  vs.  Arkema SA

National Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Arkema SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Arkema SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with National Beverage and Arkema SA

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

The idea behind National Beverage Corp and Arkema SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.