Correlation Between THRACE PLASTICS and Fevertree Drinks

Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and Fevertree Drinks 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 THRACE PLASTICS and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THRACE PLASTICS and Fevertree Drinks PLC, you can compare the effects of market volatilities on THRACE PLASTICS and Fevertree Drinks 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 THRACE PLASTICS with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Fevertree Drinks.

Diversification Opportunities for THRACE PLASTICS and Fevertree Drinks

-0.18

Correlation Coefficient

THRACE PLASTICS  Fevertree Drinks

Good diversification

The 3 months correlation between THRACE and Fevertree is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Fevertree Drinks go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and Fevertree Drinks

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.55 times more return on investment than Fevertree Drinks. However, THRACE PLASTICS is 1.83 times less risky than Fevertree Drinks. It trades about 0.02 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.1 per unit of risk. If you would invest  391.00  in THRACE PLASTICS on September 5, 2024 and sell it today you would earn a total of  5.00  from holding THRACE PLASTICS or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

THRACE PLASTICS  vs.  Fevertree Drinks PLC

THRACE PLASTICS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fevertree Drinks PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with THRACE PLASTICS and Fevertree Drinks

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

The idea behind THRACE PLASTICS and Fevertree Drinks PLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.