Correlation Between National Beverage and Kolibri Global

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

Diversification Opportunities for National Beverage and Kolibri Global

-0.42

Correlation Coefficient

National Beverage  Kolibri Global

Very good diversification

The 3 months correlation between National and Kolibri is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Kolibri Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolibri Global Energy 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 Kolibri Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolibri Global Energy has no effect on the direction of National Beverage i.e., National Beverage and Kolibri Global go up and down completely randomly.

Pair Corralation between National Beverage and Kolibri Global

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Kolibri Global. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 3.99 times less risky than Kolibri Global. The stock trades about -0.39 of its potential returns per unit of risk. The Kolibri Global Energy is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  466.00  in Kolibri Global Energy on October 11, 2024 and sell it today you would earn a total of  132.00  from holding Kolibri Global Energy or generate 28.33% return on investment over 90 days.

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

National Beverage Corp  vs.  Kolibri Global Energy

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.

Kolibri Global Energy

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kolibri Global Energy are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Kolibri Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Kolibri Global

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

The idea behind National Beverage Corp and Kolibri Global Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.