Correlation Between Suntory Beverage and SNDL

Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and SNDL 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 SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Suntory Beverage and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and SNDL.

Diversification Opportunities for Suntory Beverage and SNDL

0.15

Correlation Coefficient

Suntory Beverage  SNDL

Average diversification

The 3 months correlation between Suntory and SNDL is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and SNDL go up and down completely randomly.

Pair Corralation between Suntory Beverage and SNDL

Assuming the 90 days horizon Suntory Beverage is expected to generate 9.41 times less return on investment than SNDL. But when comparing it to its historical volatility, Suntory Beverage Food is 2.5 times less risky than SNDL. It trades about 0.01 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  142.00  in SNDL Inc on September 12, 2024 and sell it today you would earn a total of  41.00  from holding SNDL Inc or generate 28.87% return on investment over 90 days.

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

Suntory Beverage Food  vs.  SNDL Inc

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Suntory Beverage and SNDL

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

The idea behind Suntory Beverage Food and SNDL Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.