Correlation Between Boston Beer and SAMMON

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

By analyzing existing cross correlation between Boston Beer and SAMMON 475 08 APR 32, you can compare the effects of market volatilities on Boston Beer and SAMMON 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 SAMMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and SAMMON.

Diversification Opportunities for Boston Beer and SAMMON

0.72

Correlation Coefficient

Boston Beer  SAMMON

Poor diversification

The 3 months correlation between Boston and SAMMON is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and SAMMON 475 08 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMMON 475 08 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 SAMMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMMON 475 08 has no effect on the direction of Boston Beer i.e., Boston Beer and SAMMON go up and down completely randomly.

Pair Corralation between Boston Beer and SAMMON

Considering the 90-day investment horizon Boston Beer is expected to generate 1.36 times less return on investment than SAMMON. In addition to that, Boston Beer is 1.7 times more volatile than SAMMON 475 08 APR 32. It trades about 0.01 of its total potential returns per unit of risk. SAMMON 475 08 APR 32 is currently generating about 0.01 per unit of volatility. If you would invest  8,614  in SAMMON 475 08 APR 32 on September 28, 2024 and sell it today you would earn a total of  58.00  from holding SAMMON 475 08 APR 32 or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	15.93%
Values	Daily Returns

Boston Beer  vs.  SAMMON 475 08 APR 32

Boston Beer

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boston Beer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SAMMON 475 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMMON 475 08 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for SAMMON 475 08 APR 32 investors.

Pair Trading with Boston Beer and SAMMON

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

The idea behind Boston Beer and SAMMON 475 08 APR 32 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.