Correlation Between Smart For and Koios Beverage

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

By analyzing existing cross correlation between Smart for Life, and Koios Beverage Corp, you can compare the effects of market volatilities on Smart For and Koios Beverage 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 Smart For with a short position of Koios Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart For and Koios Beverage.

Diversification Opportunities for Smart For and Koios Beverage

0.64

Correlation Coefficient

Smart For  Koios Beverage

Poor diversification

The 3 months correlation between Smart and Koios is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Koios Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koios Beverage Corp and Smart For 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 Smart for Life, are associated (or correlated) with Koios Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koios Beverage Corp has no effect on the direction of Smart For i.e., Smart For and Koios Beverage go up and down completely randomly.

Pair Corralation between Smart For and Koios Beverage

Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Koios Beverage. In addition to that, Smart For is 1.34 times more volatile than Koios Beverage Corp. It trades about -0.43 of its total potential returns per unit of risk. Koios Beverage Corp is currently generating about -0.08 per unit of volatility. If you would invest  21.00  in Koios Beverage Corp on September 3, 2024 and sell it today you would lose (19.60) from holding Koios Beverage Corp or give up 93.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	29.23%
Values	Daily Returns

Smart for Life,  vs.  Koios Beverage Corp

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Koios Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koios Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Pair Trading with Smart For and Koios Beverage

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

The idea behind Smart for Life, and Koios Beverage 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.