Correlation Between National Beverage and Golden Star

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

Diversification Opportunities for National Beverage and Golden Star

0.13

Correlation Coefficient

National Beverage  Golden Star

Average diversification

The 3 months correlation between National and Golden is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Golden Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Acquisition 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 Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Acquisition has no effect on the direction of National Beverage i.e., National Beverage and Golden Star go up and down completely randomly.

Pair Corralation between National Beverage and Golden Star

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.06 times more return on investment than Golden Star. However, National Beverage Corp is 17.2 times less risky than Golden Star. It trades about -0.15 of its potential returns per unit of risk. Golden Star Acquisition is currently generating about -0.12 per unit of risk. If you would invest  4,383  in National Beverage Corp on October 27, 2024 and sell it today you would lose (158.00) from holding National Beverage Corp or give up 3.6% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Golden Star Acquisition

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Golden Star Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Star Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Beverage and Golden Star

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

The idea behind National Beverage Corp and Golden Star Acquisition 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.