Correlation Between National Beverage and BAIYU Holdings

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

By analyzing existing cross correlation between National Beverage Corp and BAIYU Holdings, you can compare the effects of market volatilities on National Beverage and BAIYU Holdings 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 National Beverage with a short position of BAIYU Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and BAIYU Holdings.

Diversification Opportunities for National Beverage and BAIYU Holdings

-0.48

Correlation Coefficient

National Beverage  BAIYU Holdings

Very good diversification

The 3 months correlation between National and BAIYU is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and National Beverage 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 National Beverage Corp are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of National Beverage i.e., National Beverage and BAIYU Holdings go up and down completely randomly.

Pair Corralation between National Beverage and BAIYU Holdings

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.17 times more return on investment than BAIYU Holdings. However, National Beverage Corp is 6.06 times less risky than BAIYU Holdings. It trades about 0.08 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.28 per unit of risk. If you would invest  4,435  in National Beverage Corp on September 12, 2024 and sell it today you would earn a total of  322.00  from holding National Beverage Corp or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

National Beverage Corp  vs.  BAIYU Holdings

National Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Beverage and BAIYU Holdings

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

The idea behind National Beverage Corp and BAIYU Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.