Correlation Between Suntory Beverage and Sphere Entertainment

Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and Sphere Entertainment 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 Sphere Entertainment 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 Sphere Entertainment Co, you can compare the effects of market volatilities on Suntory Beverage and Sphere Entertainment 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 Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and Sphere Entertainment.

Diversification Opportunities for Suntory Beverage and Sphere Entertainment

0.14

Correlation Coefficient

Suntory Beverage  Sphere Entertainment

Average diversification

The 3 months correlation between Suntory and Sphere is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Suntory Beverage and Sphere Entertainment

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the Sphere Entertainment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Suntory Beverage Food is 1.63 times less risky than Sphere Entertainment. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Sphere Entertainment Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,672  in Sphere Entertainment Co on September 5, 2024 and sell it today you would earn a total of  383.00  from holding Sphere Entertainment Co or generate 10.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Suntory Beverage Food  vs.  Sphere Entertainment Co

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Suntory Beverage and Sphere Entertainment

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

The idea behind Suntory Beverage Food and Sphere Entertainment Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.