Correlation Between Pond Technologies and Flow Beverage

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

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

Diversification Opportunities for Pond Technologies and Flow Beverage

-0.07

Correlation Coefficient

Pond Technologies  Flow Beverage

Good diversification

The 3 months correlation between Pond and Flow is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pond Technologies Holdings and Flow Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Beverage Corp and Pond Technologies 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 Pond Technologies Holdings are associated (or correlated) with Flow Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Beverage Corp has no effect on the direction of Pond Technologies i.e., Pond Technologies and Flow Beverage go up and down completely randomly.

Pair Corralation between Pond Technologies and Flow Beverage

Assuming the 90 days horizon Pond Technologies Holdings is expected to generate 6.29 times more return on investment than Flow Beverage. However, Pond Technologies is 6.29 times more volatile than Flow Beverage Corp. It trades about 0.16 of its potential returns per unit of risk. Flow Beverage Corp is currently generating about -0.08 per unit of risk. If you would invest  1.02  in Pond Technologies Holdings on September 14, 2024 and sell it today you would earn a total of  0.59  from holding Pond Technologies Holdings or generate 57.84% return on investment over 90 days.

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

Pond Technologies Holdings  vs.  Flow Beverage Corp

Pond Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Flow Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flow Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers 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.

Pair Trading with Pond Technologies and Flow Beverage

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

The idea behind Pond Technologies Holdings and Flow Beverage Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.