Correlation Between Boston Beer and CCSB Financial

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

By analyzing existing cross correlation between Boston Beer and CCSB Financial Corp, you can compare the effects of market volatilities on Boston Beer and CCSB Financial 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 CCSB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and CCSB Financial.

Diversification Opportunities for Boston Beer and CCSB Financial

-0.21

Correlation Coefficient

Boston Beer  CCSB Financial

Very good diversification

The 3 months correlation between Boston and CCSB is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp 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 CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Boston Beer i.e., Boston Beer and CCSB Financial go up and down completely randomly.

Pair Corralation between Boston Beer and CCSB Financial

Considering the 90-day investment horizon Boston Beer is expected to generate 0.53 times more return on investment than CCSB Financial. However, Boston Beer is 1.87 times less risky than CCSB Financial. It trades about -0.37 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about -0.21 per unit of risk. If you would invest  32,247  in Boston Beer on October 8, 2024 and sell it today you would lose (3,331) from holding Boston Beer or give up 10.33% of portfolio value over 90 days.

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

Boston Beer  vs.  CCSB Financial Corp

Boston Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCSB Financial Corp 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Boston Beer and CCSB Financial

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

The idea behind Boston Beer and CCSB Financial Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.