Correlation Between Ambev SA and Four Leaf

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

By analyzing existing cross correlation between Ambev SA ADR and Four Leaf Acquisition, you can compare the effects of market volatilities on Ambev SA and Four Leaf 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 Ambev SA with a short position of Four Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Four Leaf.

Diversification Opportunities for Ambev SA and Four Leaf

-0.59

Correlation Coefficient

Ambev SA  Four Leaf

Excellent diversification

The 3 months correlation between Ambev and Four is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Four Leaf Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Leaf Acquisition and Ambev SA 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 Ambev SA ADR are associated (or correlated) with Four Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Leaf Acquisition has no effect on the direction of Ambev SA i.e., Ambev SA and Four Leaf go up and down completely randomly.

Pair Corralation between Ambev SA and Four Leaf

Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Four Leaf. In addition to that, Ambev SA is 4.3 times more volatile than Four Leaf Acquisition. It trades about -0.02 of its total potential returns per unit of risk. Four Leaf Acquisition is currently generating about 0.06 per unit of volatility. If you would invest  1,000.00  in Four Leaf Acquisition on October 11, 2024 and sell it today you would earn a total of  104.00  from holding Four Leaf Acquisition or generate 10.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.32%
Values	Daily Returns

Ambev SA ADR  vs.  Four Leaf Acquisition

Ambev SA ADR

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Four Leaf Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ambev SA and Four Leaf

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

The idea behind Ambev SA ADR and Four Leaf Acquisition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.