Correlation Between Boston Beer and Ambev SA

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

By analyzing existing cross correlation between Boston Beer and Ambev SA ADR, you can compare the effects of market volatilities on Boston Beer and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Ambev SA.

Diversification Opportunities for Boston Beer and Ambev SA

0.7

Correlation Coefficient

Boston Beer  Ambev SA

Poor diversification

The 3 months correlation between Boston and Ambev is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR 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 Boston Beer are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Boston Beer i.e., Boston Beer and Ambev SA go up and down completely randomly.

Pair Corralation between Boston Beer and Ambev SA

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Ambev SA. In addition to that, Boston Beer is 1.37 times more volatile than Ambev SA ADR. It trades about -0.1 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about -0.11 per unit of volatility. If you would invest  244.00  in Ambev SA ADR on May 5, 2025 and sell it today you would lose (26.00) from holding Ambev SA ADR or give up 10.66% of portfolio value over 90 days.

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

Boston Beer  vs.  Ambev SA ADR

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ambev SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambev SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Boston Beer and Ambev SA

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

The idea behind Boston Beer and Ambev SA ADR 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.

Check out your portfolio center.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.