Correlation Between Alkaline Water and Eq Energy

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

By analyzing existing cross correlation between Alkaline Water and Eq Energy Drink, you can compare the effects of market volatilities on Alkaline Water and Eq Energy 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 Alkaline Water with a short position of Eq Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkaline Water and Eq Energy.

Diversification Opportunities for Alkaline Water and Eq Energy

-0.09

Correlation Coefficient

Alkaline Water  Eq Energy

Good diversification

The 3 months correlation between Alkaline and EQLB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alkaline Water and Eq Energy Drink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eq Energy Drink and Alkaline Water 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 Alkaline Water are associated (or correlated) with Eq Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eq Energy Drink has no effect on the direction of Alkaline Water i.e., Alkaline Water and Eq Energy go up and down completely randomly.

Pair Corralation between Alkaline Water and Eq Energy

If you would invest  0.17  in Eq Energy Drink on September 12, 2024 and sell it today you would lose (0.01) from holding Eq Energy Drink or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Alkaline Water  vs.  Eq Energy Drink

Alkaline Water

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eq Energy Drink

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eq Energy Drink are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Eq Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkaline Water and Eq Energy

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

The idea behind Alkaline Water and Eq Energy Drink 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.