Correlation Between Associated Alcohols and S P

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

By analyzing existing cross correlation between Associated Alcohols Breweries and S P Apparels, you can compare the effects of market volatilities on Associated Alcohols and S P 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 Associated Alcohols with a short position of S P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Alcohols and S P.

Diversification Opportunities for Associated Alcohols and S P

-0.45

Correlation Coefficient

Associated Alcohols  S P

Very good diversification

The 3 months correlation between Associated and SPAL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Associated Alcohols Breweries and S P Apparels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S P Apparels and Associated Alcohols 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 Associated Alcohols Breweries are associated (or correlated) with S P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S P Apparels has no effect on the direction of Associated Alcohols i.e., Associated Alcohols and S P go up and down completely randomly.

Pair Corralation between Associated Alcohols and S P

Assuming the 90 days trading horizon Associated Alcohols Breweries is expected to under-perform the S P. But the stock apears to be less risky and, when comparing its historical volatility, Associated Alcohols Breweries is 1.2 times less risky than S P. The stock trades about -0.03 of its potential returns per unit of risk. The S P Apparels is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  72,030  in S P Apparels on April 17, 2025 and sell it today you would earn a total of  8,560  from holding S P Apparels or generate 11.88% return on investment over 90 days.

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

Associated Alcohols Breweries  vs.  S P Apparels

Associated Alcohols

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated Alcohols Breweries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Associated Alcohols is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

S P Apparels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in S P Apparels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, S P unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Alcohols and S P

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

The idea behind Associated Alcohols Breweries and S P Apparels 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.