Correlation Between Compania Cervecerias and Consumer Products

Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Consumer Products 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 Consumer Products 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 Consumer Products Fund, you can compare the effects of market volatilities on Compania Cervecerias and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Consumer Products.

Diversification Opportunities for Compania Cervecerias and Consumer Products

-0.61

Correlation Coefficient

Compania Cervecerias  Consumer Products

Excellent diversification

The 3 months correlation between Compania and Consumer is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Consumer Products go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Consumer Products

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to under-perform the Consumer Products. In addition to that, Compania Cervecerias is 2.72 times more volatile than Consumer Products Fund. It trades about -0.08 of its total potential returns per unit of risk. Consumer Products Fund is currently generating about 0.13 per unit of volatility. If you would invest  3,115  in Consumer Products Fund on June 23, 2024 and sell it today you would earn a total of  166.00  from holding Consumer Products Fund or generate 5.33% return on investment over 90 days.

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

Compania Cervecerias Unidas  vs.  Consumer Products Fund

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 latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Consumer Products

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Products Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Consumer Products is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compania Cervecerias and Consumer Products

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

The idea behind Compania Cervecerias Unidas and Consumer Products Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .