Correlation Between Fevertree Drinks and Golden Matrix

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

Diversification Opportunities for Fevertree Drinks and Golden Matrix

0.35

Correlation Coefficient

Fevertree Drinks  Golden Matrix

Weak diversification

The 3 months correlation between Fevertree and Golden is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Golden Matrix Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Matrix Group 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 Golden Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Matrix Group has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Golden Matrix go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Golden Matrix

Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Golden Matrix. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.84 times less risky than Golden Matrix. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Golden Matrix Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  326.00  in Golden Matrix Group on October 22, 2024 and sell it today you would lose (122.00) from holding Golden Matrix Group or give up 37.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.4%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Golden Matrix Group

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.

Golden Matrix Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Matrix Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Golden Matrix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fevertree Drinks and Golden Matrix

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

The idea behind Fevertree Drinks Plc and Golden Matrix Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..