Correlation Between Fevertree Drinks and Roma Green

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

Diversification Opportunities for Fevertree Drinks and Roma Green

0.15

Correlation Coefficient

Fevertree Drinks  Roma Green

Average diversification

The 3 months correlation between Fevertree and Roma is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Roma Green go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Roma Green

Assuming the 90 days horizon Fevertree Drinks Plc is expected to generate 0.58 times more return on investment than Roma Green. However, Fevertree Drinks Plc is 1.72 times less risky than Roma Green. It trades about 0.09 of its potential returns per unit of risk. Roma Green Finance is currently generating about 0.04 per unit of risk. If you would invest  827.00  in Fevertree Drinks Plc on December 20, 2024 and sell it today you would earn a total of  151.00  from holding Fevertree Drinks Plc or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Roma Green Finance

Fevertree Drinks Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fevertree Drinks reported solid returns over the last few months and may actually be approaching a breakup point.

Roma Green Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roma Green Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile primary indicators, Roma Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and Roma Green

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

The idea behind Fevertree Drinks Plc and Roma Green Finance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.