Correlation Between Suntory Beverage and Bowen Acquisition

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

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

Diversification Opportunities for Suntory Beverage and Bowen Acquisition

0.07

Correlation Coefficient

Suntory Beverage  Bowen Acquisition

Significant diversification

The 3 months correlation between Suntory and Bowen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp and Suntory Beverage 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 Suntory Beverage Food are associated (or correlated) with Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Bowen Acquisition go up and down completely randomly.

Pair Corralation between Suntory Beverage and Bowen Acquisition

Assuming the 90 days horizon Suntory Beverage is expected to generate 2.29 times less return on investment than Bowen Acquisition. But when comparing it to its historical volatility, Suntory Beverage Food is 10.17 times less risky than Bowen Acquisition. It trades about 0.04 of its potential returns per unit of risk. Bowen Acquisition Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,110  in Bowen Acquisition Corp on December 20, 2024 and sell it today you would lose (370.00) from holding Bowen Acquisition Corp or give up 33.33% of portfolio value over 90 days.

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

Suntory Beverage Food  vs.  Bowen Acquisition Corp

Suntory Beverage Food

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suntory Beverage Food are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Suntory Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bowen Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowen Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Bowen Acquisition may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Suntory Beverage and Bowen Acquisition

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

The idea behind Suntory Beverage Food and Bowen Acquisition 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.