Correlation Between Ambev SA and Hurco Companies

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

Diversification Opportunities for Ambev SA and Hurco Companies

-0.48

Correlation Coefficient

Ambev SA  Hurco Companies

Very good diversification

The 3 months correlation between Ambev and Hurco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies 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 Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Ambev SA i.e., Ambev SA and Hurco Companies go up and down completely randomly.

Pair Corralation between Ambev SA and Hurco Companies

Given the investment horizon of 90 days Ambev SA is expected to generate 6.67 times less return on investment than Hurco Companies. But when comparing it to its historical volatility, Ambev SA ADR is 1.7 times less risky than Hurco Companies. It trades about 0.02 of its potential returns per unit of risk. Hurco Companies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,846  in Hurco Companies on September 12, 2024 and sell it today you would earn a total of  184.00  from holding Hurco Companies or generate 9.97% return on investment over 90 days.

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

Ambev SA ADR  vs.  Hurco Companies

Ambev SA ADR

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Ambev SA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hurco Companies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ambev SA and Hurco Companies

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

The idea behind Ambev SA ADR and Hurco Companies 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.