Correlation Between Asahi Group and Boston Beer

Can any of the company-specific risk be diversified away by investing in both Asahi Group and Boston Beer 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 Asahi Group and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahi Group Holdings and The Boston Beer, you can compare the effects of market volatilities on Asahi Group and Boston Beer 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 Asahi Group with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Group and Boston Beer.

Diversification Opportunities for Asahi Group and Boston Beer

-0.88

Correlation Coefficient

Asahi Group  Boston Beer

Pay attention - limited upside

The 3 months correlation between Asahi and Boston is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Group Holdings and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Asahi Group 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 Asahi Group Holdings are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Asahi Group i.e., Asahi Group and Boston Beer go up and down completely randomly.

Pair Corralation between Asahi Group and Boston Beer

Assuming the 90 days horizon Asahi Group Holdings is expected to under-perform the Boston Beer. In addition to that, Asahi Group is 1.37 times more volatile than The Boston Beer. It trades about -0.09 of its total potential returns per unit of risk. The Boston Beer is currently generating about 0.24 per unit of volatility. If you would invest  24,160  in The Boston Beer on September 12, 2024 and sell it today you would earn a total of  6,180  from holding The Boston Beer or generate 25.58% return on investment over 90 days.

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

Asahi Group Holdings  vs.  The Boston Beer

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Boston Beer

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Boston Beer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asahi Group and Boston Beer

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

The idea behind Asahi Group Holdings and The Boston Beer 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.