Correlation Between Pernod Ricard and Eastside Distilling

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

By analyzing existing cross correlation between Pernod Ricard SA and Eastside Distilling, you can compare the effects of market volatilities on Pernod Ricard and Eastside Distilling 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 Pernod Ricard with a short position of Eastside Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Eastside Distilling.

Diversification Opportunities for Pernod Ricard and Eastside Distilling

0.16

Correlation Coefficient

Pernod Ricard  Eastside Distilling

Average diversification

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

Pair Corralation between Pernod Ricard and Eastside Distilling

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Eastside Distilling. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 2.57 times less risky than Eastside Distilling. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Eastside Distilling is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Eastside Distilling on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Eastside Distilling or generate 25.45% return on investment over 90 days.

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

Pernod Ricard SA  vs.  Eastside Distilling

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eastside Distilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastside Distilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pernod Ricard and Eastside Distilling

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

The idea behind Pernod Ricard SA and Eastside Distilling 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.