Correlation Between BOSTON BEER and CCC SA

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and CCC SA 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 BOSTON BEER and CCC SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOSTON BEER A and CCC SA, you can compare the effects of market volatilities on BOSTON BEER and CCC SA 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 BOSTON BEER with a short position of CCC SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and CCC SA.

Diversification Opportunities for BOSTON BEER and CCC SA

0.77

Correlation Coefficient

BOSTON BEER  CCC SA

Poor diversification

The 3 months correlation between BOSTON and CCC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and CCC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCC SA and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with CCC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCC SA has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and CCC SA go up and down completely randomly.

Pair Corralation between BOSTON BEER and CCC SA

Assuming the 90 days trading horizon BOSTON BEER is expected to generate 1.21 times less return on investment than CCC SA. But when comparing it to its historical volatility, BOSTON BEER A is 1.88 times less risky than CCC SA. It trades about 0.21 of its potential returns per unit of risk. CCC SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,486  in CCC SA on September 17, 2024 and sell it today you would earn a total of  940.00  from holding CCC SA or generate 26.97% return on investment over 90 days.

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

BOSTON BEER A   vs.  CCC SA

BOSTON BEER A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

CCC SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CCC SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CCC SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOSTON BEER and CCC SA

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

The idea behind BOSTON BEER A and CCC SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.