Correlation Between Fevertree Drinks and Bowen Acquisition

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

Diversification Opportunities for Fevertree Drinks and Bowen Acquisition

0.34

Correlation Coefficient

Fevertree Drinks  Bowen Acquisition

Weak diversification

The 3 months correlation between Fevertree and Bowen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp 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 Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Bowen Acquisition go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Bowen Acquisition

Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Bowen Acquisition. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 18.01 times less risky than Bowen Acquisition. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Bowen Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Bowen Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  1,150  from holding Bowen Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.99%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Bowen Acquisition Corp

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bowen Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowen Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bowen Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fevertree Drinks and Bowen Acquisition

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

The idea behind Fevertree Drinks Plc and Bowen Acquisition Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.