Correlation Between Compania Cervecerias and First Data

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

By analyzing existing cross correlation between Compania Cervecerias Unidas and First Data, you can compare the effects of market volatilities on Compania Cervecerias and First Data 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 Compania Cervecerias with a short position of First Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and First Data.

Diversification Opportunities for Compania Cervecerias and First Data

0.0

Correlation Coefficient

Compania Cervecerias  First Data

Pay attention - limited upside

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

Pair Corralation between Compania Cervecerias and First Data

If you would invest  1,187  in Compania Cervecerias Unidas on February 1, 2024 and sell it today you would earn a total of  23.00  from holding Compania Cervecerias Unidas or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  First Data

Compania Cervecerias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Cervecerias Unidas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Compania Cervecerias is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

First Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, First Data is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Compania Cervecerias and First Data

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

The idea behind Compania Cervecerias Unidas and First Data 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.