Correlation Between Fevertree Drinks and Affinity Beverage

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

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

Diversification Opportunities for Fevertree Drinks and Affinity Beverage

0.0

Correlation Coefficient

Fevertree Drinks  Affinity Beverage

Pay attention - limited upside

The 3 months correlation between Fevertree and Affinity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Affinity Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Beverage and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Affinity Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Beverage has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Affinity Beverage go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Affinity Beverage

If you would invest  0.00  in Affinity Beverage Group on February 2, 2024 and sell it today you would earn a total of  0.00  from holding Affinity Beverage Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Affinity Beverage Group

Fevertree Drinks Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fevertree Drinks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Affinity Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affinity Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Affinity Beverage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fevertree Drinks and Affinity Beverage

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

The idea behind Fevertree Drinks Plc and Affinity Beverage Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.