Correlation Between ESE Entertainment and Flow Beverage

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

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

Diversification Opportunities for ESE Entertainment and Flow Beverage

-0.17

Correlation Coefficient

ESE Entertainment  Flow Beverage

Good diversification

The 3 months correlation between ESE and Flow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Flow Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Beverage Corp and ESE Entertainment 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 ESE Entertainment are associated (or correlated) with Flow Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Beverage Corp has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Flow Beverage go up and down completely randomly.

Pair Corralation between ESE Entertainment and Flow Beverage

Assuming the 90 days horizon ESE Entertainment is expected to generate 1.78 times less return on investment than Flow Beverage. But when comparing it to its historical volatility, ESE Entertainment is 1.25 times less risky than Flow Beverage. It trades about 0.01 of its potential returns per unit of risk. Flow Beverage Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Flow Beverage Corp on April 24, 2025 and sell it today you would lose (1.50) from holding Flow Beverage Corp or give up 20.0% of portfolio value over 90 days.

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

ESE Entertainment  vs.  Flow Beverage Corp

ESE Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days ESE Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ESE Entertainment is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Flow Beverage Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Flow Beverage may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with ESE Entertainment and Flow Beverage

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

The idea behind ESE Entertainment and Flow Beverage Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.