Correlation Between Fevertree Drinks and OAKRIDGE INTERNATIONAL

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

Diversification Opportunities for Fevertree Drinks and OAKRIDGE INTERNATIONAL

0.16

Correlation Coefficient

Fevertree Drinks  OAKRIDGE INTERNATIONAL

Average diversification

The 3 months correlation between Fevertree and OAKRIDGE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and OAKRIDGE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKRIDGE INTERNATIONAL has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and OAKRIDGE INTERNATIONAL go up and down completely randomly.

Pair Corralation between Fevertree Drinks and OAKRIDGE INTERNATIONAL

Assuming the 90 days trading horizon Fevertree Drinks is expected to generate 2.38 times less return on investment than OAKRIDGE INTERNATIONAL. But when comparing it to its historical volatility, Fevertree Drinks PLC is 3.56 times less risky than OAKRIDGE INTERNATIONAL. It trades about 0.05 of its potential returns per unit of risk. OAKRIDGE INTERNATIONAL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.95  in OAKRIDGE INTERNATIONAL on December 24, 2024 and sell it today you would lose (0.60) from holding OAKRIDGE INTERNATIONAL or give up 20.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fevertree Drinks PLC  vs.  OAKRIDGE INTERNATIONAL

Fevertree Drinks PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fevertree Drinks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OAKRIDGE INTERNATIONAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OAKRIDGE INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, OAKRIDGE INTERNATIONAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and OAKRIDGE INTERNATIONAL

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

The idea behind Fevertree Drinks PLC and OAKRIDGE INTERNATIONAL 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.