Correlation Between Boston Beer and Asahi Group

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

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

Diversification Opportunities for Boston Beer and Asahi Group

-0.35

Correlation Coefficient

Boston Beer  Asahi Group

Very good diversification

The 3 months correlation between Boston and Asahi is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Boston Beer 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 Boston Beer are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Boston Beer i.e., Boston Beer and Asahi Group go up and down completely randomly.

Pair Corralation between Boston Beer and Asahi Group

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Asahi Group. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 2.33 times less risky than Asahi Group. The stock trades about -0.17 of its potential returns per unit of risk. The Asahi Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,199  in Asahi Group Holdings on December 28, 2024 and sell it today you would earn a total of  90.00  from holding Asahi Group Holdings or generate 7.51% return on investment over 90 days.

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

Boston Beer  vs.  Asahi Group Holdings

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Asahi Group Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Asahi Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and Asahi Group

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

The idea behind Boston Beer and Asahi Group Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.