Correlation Between Suntory Beverage and Iris Energy

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

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

Diversification Opportunities for Suntory Beverage and Iris Energy

-0.72

Correlation Coefficient

Suntory Beverage  Iris Energy

Pay attention - limited upside

The 3 months correlation between Suntory and Iris is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and Suntory 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 Suntory Beverage Food are associated (or correlated) with Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Iris Energy go up and down completely randomly.

Pair Corralation between Suntory Beverage and Iris Energy

Assuming the 90 days horizon Suntory Beverage is expected to generate 18.68 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Suntory Beverage Food is 4.58 times less risky than Iris Energy. It trades about 0.02 of its potential returns per unit of risk. Iris Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Iris Energy on September 7, 2024 and sell it today you would earn a total of  900.00  from holding Iris Energy or generate 174.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Suntory Beverage Food  vs.  Iris Energy

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Iris Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suntory Beverage and Iris Energy

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

The idea behind Suntory Beverage Food and Iris Energy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.