Correlation Between Fevertree Drinks and Genfit

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

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

Diversification Opportunities for Fevertree Drinks and Genfit

0.75

Correlation Coefficient

Fevertree Drinks  Genfit

Poor diversification

The 3 months correlation between Fevertree and Genfit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Genfit go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Genfit

Assuming the 90 days horizon Fevertree Drinks Plc is expected to generate 0.41 times more return on investment than Genfit. However, Fevertree Drinks Plc is 2.42 times less risky than Genfit. It trades about -0.22 of its potential returns per unit of risk. Genfit is currently generating about -0.12 per unit of risk. If you would invest  1,028  in Fevertree Drinks Plc on September 24, 2024 and sell it today you would lose (201.00) from holding Fevertree Drinks Plc or give up 19.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Genfit

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental 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 Fevertree Drinks and Genfit

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

The idea behind Fevertree Drinks Plc and Genfit 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.