Correlation Between SBC Medical and Vodka Brands

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

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

Diversification Opportunities for SBC Medical and Vodka Brands

0.12

Correlation Coefficient

SBC Medical  Vodka Brands

Average diversification

The 3 months correlation between SBC and Vodka is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SBC Medical Group and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp and SBC Medical 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 SBC Medical Group are associated (or correlated) with Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of SBC Medical i.e., SBC Medical and Vodka Brands go up and down completely randomly.

Pair Corralation between SBC Medical and Vodka Brands

Assuming the 90 days horizon SBC Medical Group is expected to generate 1.49 times more return on investment than Vodka Brands. However, SBC Medical is 1.49 times more volatile than Vodka Brands Corp. It trades about 0.18 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.03 per unit of risk. If you would invest  7.31  in SBC Medical Group on October 4, 2024 and sell it today you would earn a total of  16.79  from holding SBC Medical Group or generate 229.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	15.09%
Values	Daily Returns

SBC Medical Group  vs.  Vodka Brands Corp

SBC Medical Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBC Medical and Vodka Brands

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

The idea behind SBC Medical Group and Vodka Brands 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.