Correlation Between National Beverage and CERo Therapeutics

Can any of the company-specific risk be diversified away by investing in both National Beverage and CERo Therapeutics 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 CERo Therapeutics 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 CERo Therapeutics Holdings, you can compare the effects of market volatilities on National Beverage and CERo Therapeutics 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 CERo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and CERo Therapeutics.

Diversification Opportunities for National Beverage and CERo Therapeutics

0.46

Correlation Coefficient

National Beverage  CERo Therapeutics

Very weak diversification

The 3 months correlation between National and CERo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics 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 CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of National Beverage i.e., National Beverage and CERo Therapeutics go up and down completely randomly.

Pair Corralation between National Beverage and CERo Therapeutics

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the CERo Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 20.7 times less risky than CERo Therapeutics. The stock trades about -0.14 of its potential returns per unit of risk. The CERo Therapeutics Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.71  in CERo Therapeutics Holdings on October 6, 2024 and sell it today you would earn a total of  0.19  from holding CERo Therapeutics Holdings or generate 26.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

National Beverage Corp  vs.  CERo Therapeutics Holdings

National Beverage Corp

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CERo Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and CERo Therapeutics

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

The idea behind National Beverage Corp and CERo Therapeutics Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .