Correlation Between Andrew Peller and Big Rock

Can any of the company-specific risk be diversified away by investing in both Andrew Peller and Big Rock 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 Andrew Peller and Big Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andrew Peller Limited and Big Rock Brewery, you can compare the effects of market volatilities on Andrew Peller and Big Rock 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 Andrew Peller with a short position of Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andrew Peller and Big Rock.

Diversification Opportunities for Andrew Peller and Big Rock

0.5

Correlation Coefficient

Andrew Peller  Big Rock

Very weak diversification

The 3 months correlation between Andrew and Big is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Andrew Peller Limited and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery and Andrew Peller 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 Andrew Peller Limited are associated (or correlated) with Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of Andrew Peller i.e., Andrew Peller and Big Rock go up and down completely randomly.

Pair Corralation between Andrew Peller and Big Rock

Assuming the 90 days trading horizon Andrew Peller Limited is expected to under-perform the Big Rock. But the stock apears to be less risky and, when comparing its historical volatility, Andrew Peller Limited is 4.44 times less risky than Big Rock. The stock trades about 0.0 of its potential returns per unit of risk. The Big Rock Brewery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Big Rock Brewery on September 23, 2024 and sell it today you would lose (8.00) from holding Big Rock Brewery or give up 6.67% of portfolio value over 90 days.

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

Andrew Peller Limited  vs.  Big Rock Brewery

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andrew Peller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Andrew Peller is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Big Rock Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Big Rock is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Andrew Peller and Big Rock

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

The idea behind Andrew Peller Limited and Big Rock Brewery 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.