Correlation Between National Beverage and VEON

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

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

Diversification Opportunities for National Beverage and VEON

0.68

Correlation Coefficient

National Beverage  VEON

Poor diversification

The 3 months correlation between National and VEON is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and VEON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEON and National 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 National Beverage Corp are associated (or correlated) with VEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEON has no effect on the direction of National Beverage i.e., National Beverage and VEON go up and down completely randomly.

Pair Corralation between National Beverage and VEON

Given the investment horizon of 90 days National Beverage is expected to generate 3.72 times less return on investment than VEON. But when comparing it to its historical volatility, National Beverage Corp is 1.97 times less risky than VEON. It trades about 0.05 of its potential returns per unit of risk. VEON is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,737  in VEON on August 23, 2024 and sell it today you would earn a total of  358.00  from holding VEON or generate 13.08% return on investment over 90 days.

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

National Beverage Corp  vs.  VEON

National Beverage Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

VEON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VEON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VEON displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and VEON

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

The idea behind National Beverage Corp and VEON 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.