Correlation Between Fevertree Drinks and SBC Medical

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

Diversification Opportunities for Fevertree Drinks and SBC Medical

-0.67

Correlation Coefficient

Fevertree Drinks  SBC Medical

Excellent diversification

The 3 months correlation between Fevertree and SBC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and SBC Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC Medical 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 SBC Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC Medical Group has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and SBC Medical go up and down completely randomly.

Pair Corralation between Fevertree Drinks and SBC Medical

Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the SBC Medical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 7.12 times less risky than SBC Medical. The pink sheet trades about -0.23 of its potential returns per unit of risk. The SBC Medical Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  15.00  in SBC Medical Group on October 8, 2024 and sell it today you would earn a total of  9.00  from holding SBC Medical Group or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Fevertree Drinks Plc  vs.  SBC Medical 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.

SBC Medical Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and SBC Medical

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

The idea behind Fevertree Drinks Plc and SBC Medical 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.