Correlation Between Splash Beverage and LQR House

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

By analyzing existing cross correlation between Splash Beverage Group and LQR House Common, you can compare the effects of market volatilities on Splash Beverage and LQR House 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 Splash Beverage with a short position of LQR House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Splash Beverage and LQR House.

Diversification Opportunities for Splash Beverage and LQR House

-0.78

Correlation Coefficient

Splash Beverage  LQR House

Pay attention - limited upside

The 3 months correlation between Splash and LQR is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Splash Beverage Group and LQR House Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LQR House Common and Splash 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 Splash Beverage Group are associated (or correlated) with LQR House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LQR House Common has no effect on the direction of Splash Beverage i.e., Splash Beverage and LQR House go up and down completely randomly.

Pair Corralation between Splash Beverage and LQR House

Given the investment horizon of 90 days Splash Beverage Group is expected to under-perform the LQR House. But the stock apears to be less risky and, when comparing its historical volatility, Splash Beverage Group is 1.68 times less risky than LQR House. The stock trades about -0.07 of its potential returns per unit of risk. The LQR House Common is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  55.00  in LQR House Common on September 30, 2024 and sell it today you would earn a total of  60.00  from holding LQR House Common or generate 109.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.94%
Values	Daily Returns

Splash Beverage Group  vs.  LQR House Common

Splash Beverage Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splash Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

LQR House Common

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LQR House Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Splash Beverage and LQR House

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

The idea behind Splash Beverage Group and LQR House Common 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.