Correlation Between Innovation Beverage and YHC

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

By analyzing existing cross correlation between Innovation Beverage Group and YHC, you can compare the effects of market volatilities on Innovation Beverage and YHC 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 Innovation Beverage with a short position of YHC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovation Beverage and YHC.

Diversification Opportunities for Innovation Beverage and YHC

-0.04

Correlation Coefficient

Innovation Beverage  YHC

Good diversification

The 3 months correlation between Innovation and YHC is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Innovation Beverage Group and YHC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YHC and Innovation Beverage 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 Innovation Beverage Group are associated (or correlated) with YHC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YHC has no effect on the direction of Innovation Beverage i.e., Innovation Beverage and YHC go up and down completely randomly.

Pair Corralation between Innovation Beverage and YHC

Considering the 90-day investment horizon Innovation Beverage Group is expected to under-perform the YHC. In addition to that, Innovation Beverage is 1.07 times more volatile than YHC. It trades about -0.07 of its total potential returns per unit of risk. YHC is currently generating about -0.07 per unit of volatility. If you would invest  15,600  in YHC on October 8, 2024 and sell it today you would lose (15,442) from holding YHC or give up 98.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.77%
Values	Daily Returns

Innovation Beverage Group  vs.  YHC

Innovation Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovation Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Innovation Beverage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

YHC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YHC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, YHC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovation Beverage and YHC

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

The idea behind Innovation Beverage Group and YHC 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.