Correlation Between Diageo Plc and AS Latvijas

Can any of the company-specific risk be diversified away by investing in both Diageo Plc and AS Latvijas 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 Diageo Plc and AS Latvijas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diageo plc and AS Latvijas balzams, you can compare the effects of market volatilities on Diageo Plc and AS Latvijas 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 Diageo Plc with a short position of AS Latvijas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo Plc and AS Latvijas.

Diversification Opportunities for Diageo Plc and AS Latvijas

-0.65

Correlation Coefficient

Diageo Plc  AS Latvijas

Excellent diversification

The 3 months correlation between Diageo and UM9 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Diageo plc and AS Latvijas balzams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Latvijas balzams and Diageo Plc 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 Diageo plc are associated (or correlated) with AS Latvijas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Latvijas balzams has no effect on the direction of Diageo Plc i.e., Diageo Plc and AS Latvijas go up and down completely randomly.

Pair Corralation between Diageo Plc and AS Latvijas

Assuming the 90 days horizon Diageo plc is expected to under-perform the AS Latvijas. In addition to that, Diageo Plc is 1.7 times more volatile than AS Latvijas balzams. It trades about -0.13 of its total potential returns per unit of risk. AS Latvijas balzams is currently generating about 0.14 per unit of volatility. If you would invest  833.00  in AS Latvijas balzams on December 11, 2024 and sell it today you would earn a total of  52.00  from holding AS Latvijas balzams or generate 6.24% return on investment over 90 days.

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

Diageo plc  vs.  AS Latvijas balzams

Diageo plc

Risk-Adjusted Performance

Very Weak

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

AS Latvijas balzams

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AS Latvijas balzams are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AS Latvijas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Diageo Plc and AS Latvijas

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

The idea behind Diageo plc and AS Latvijas balzams 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.