Correlation Between Boston Beer and AUST AGRICULTURAL

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

By analyzing existing cross correlation between The Boston Beer and AUST AGRICULTURAL, you can compare the effects of market volatilities on Boston Beer and AUST AGRICULTURAL 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 Boston Beer with a short position of AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and AUST AGRICULTURAL.

Diversification Opportunities for Boston Beer and AUST AGRICULTURAL

0.35

Correlation Coefficient

Boston Beer  AUST AGRICULTURAL

Weak diversification

The 3 months correlation between Boston and AUST is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL and Boston Beer 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 The Boston Beer are associated (or correlated) with AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Boston Beer i.e., Boston Beer and AUST AGRICULTURAL go up and down completely randomly.

Pair Corralation between Boston Beer and AUST AGRICULTURAL

Assuming the 90 days trading horizon The Boston Beer is expected to generate 1.23 times more return on investment than AUST AGRICULTURAL. However, Boston Beer is 1.23 times more volatile than AUST AGRICULTURAL. It trades about -0.07 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.09 per unit of risk. If you would invest  19,960  in The Boston Beer on March 19, 2025 and sell it today you would lose (2,010) from holding The Boston Beer or give up 10.07% of portfolio value over 90 days.

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

The Boston Beer  vs.  AUST AGRICULTURAL

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AUST AGRICULTURAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUST AGRICULTURAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Boston Beer and AUST AGRICULTURAL

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

The idea behind The Boston Beer and AUST AGRICULTURAL 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.