Correlation Between BOSTON BEER and Accent Resources

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Accent Resources 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 Accent Resources 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 Accent Resources NL, you can compare the effects of market volatilities on BOSTON BEER and Accent Resources 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 Accent Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Accent Resources.

Diversification Opportunities for BOSTON BEER and Accent Resources

0.63

Correlation Coefficient

BOSTON BEER  Accent Resources

Poor diversification

The 3 months correlation between BOSTON and Accent is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Accent Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accent Resources 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 Accent Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accent Resources has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Accent Resources go up and down completely randomly.

Pair Corralation between BOSTON BEER and Accent Resources

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Accent Resources. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 11.18 times less risky than Accent Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Accent Resources NL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Accent Resources NL on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Accent Resources NL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

BOSTON BEER A   vs.  Accent Resources NL

BOSTON BEER A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 13 (%) 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.

Accent Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Accent Resources NL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Accent Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOSTON BEER and Accent Resources

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

The idea behind BOSTON BEER A and Accent Resources NL 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.