Correlation Between El Pollo and Compania Cervecerias

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

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

Diversification Opportunities for El Pollo and Compania Cervecerias

-0.73

Correlation Coefficient

El Pollo  Compania Cervecerias

Pay attention - limited upside

The 3 months correlation between LOCO and Compania is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding El Pollo Loco and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and El Pollo 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 El Pollo Loco are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of El Pollo i.e., El Pollo and Compania Cervecerias go up and down completely randomly.

Pair Corralation between El Pollo and Compania Cervecerias

Given the investment horizon of 90 days El Pollo Loco is expected to generate 1.65 times more return on investment than Compania Cervecerias. However, El Pollo is 1.65 times more volatile than Compania Cervecerias Unidas. It trades about 0.12 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.29 per unit of risk. If you would invest  889.00  in El Pollo Loco on May 5, 2025 and sell it today you would earn a total of  156.00  from holding El Pollo Loco or generate 17.55% return on investment over 90 days.

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

El Pollo Loco  vs.  Compania Cervecerias Unidas

El Pollo Loco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Pollo Loco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, El Pollo displayed solid returns over the last few months and may actually be approaching a breakup point.

Compania Cervecerias

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with El Pollo and Compania Cervecerias

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

The idea behind El Pollo Loco and Compania Cervecerias Unidas 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.