Correlation Between Ambev SA and Konami Holdings

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

Diversification Opportunities for Ambev SA and Konami Holdings

0.0

Correlation Coefficient

Ambev SA  Konami Holdings

Pay attention - limited upside

The 3 months correlation between Ambev and Konami is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Konami Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konami Holdings 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 Konami Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konami Holdings has no effect on the direction of Ambev SA i.e., Ambev SA and Konami Holdings go up and down completely randomly.

Pair Corralation between Ambev SA and Konami Holdings

If you would invest  188.00  in Ambev SA ADR on December 21, 2024 and sell it today you would earn a total of  47.00  from holding Ambev SA ADR or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ambev SA ADR  vs.  Konami Holdings

Ambev SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ambev SA showed solid returns over the last few months and may actually be approaching a breakup point.

Konami Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Konami Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Konami Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ambev SA and Konami Holdings

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

The idea behind Ambev SA ADR and Konami Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.