Correlation Between Calbee and Better Choice

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

By analyzing existing cross correlation between Calbee Inc and Better Choice, you can compare the effects of market volatilities on Calbee and Better Choice 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 Calbee with a short position of Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calbee and Better Choice.

Diversification Opportunities for Calbee and Better Choice

0.1

Correlation Coefficient

Calbee  Better Choice

Average diversification

The 3 months correlation between Calbee and Better is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Calbee Inc and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Calbee 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 Calbee Inc are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Calbee i.e., Calbee and Better Choice go up and down completely randomly.

Pair Corralation between Calbee and Better Choice

Assuming the 90 days horizon Calbee Inc is expected to under-perform the Better Choice. But the pink sheet apears to be less risky and, when comparing its historical volatility, Calbee Inc is 1.43 times less risky than Better Choice. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Better Choice is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Better Choice on September 24, 2024 and sell it today you would earn a total of  8.00  from holding Better Choice or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Calbee Inc  vs.  Better Choice

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Better Choice

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Calbee and Better Choice

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

The idea behind Calbee Inc and Better Choice 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.