Correlation Between Boston Beer and NetEase
Can any of the company-specific risk be diversified away by investing in both Boston Beer and NetEase 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 NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and NetEase, you can compare the effects of market volatilities on Boston Beer and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and NetEase.
Diversification Opportunities for Boston Beer and NetEase
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and NetEase is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Boston Beer i.e., Boston Beer and NetEase go up and down completely randomly.
Pair Corralation between Boston Beer and NetEase
Considering the 90-day investment horizon Boston Beer is expected to under-perform the NetEase. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 2.23 times less risky than NetEase. The stock trades about -0.15 of its potential returns per unit of risk. The NetEase is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8,497 in NetEase on September 24, 2024 and sell it today you would earn a total of 712.00 from holding NetEase or generate 8.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Boston Beer vs. NetEase
Performance |
Timeline |
Boston Beer |
NetEase |
Boston Beer and NetEase Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Beer and NetEase
The main advantage of trading using opposite Boston Beer and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.Boston Beer vs. Budweiser Brewing | Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Heineken NV | Boston Beer vs. Suntory Beverage Food |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |