Correlation Between Ambev SA and Latamgrowth SPAC

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

Diversification Opportunities for Ambev SA and Latamgrowth SPAC

-0.54

Correlation Coefficient

Ambev SA  Latamgrowth SPAC

Excellent diversification

The 3 months correlation between Ambev and Latamgrowth is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Latamgrowth SPAC Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latamgrowth SPAC Unit 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 Latamgrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latamgrowth SPAC Unit has no effect on the direction of Ambev SA i.e., Ambev SA and Latamgrowth SPAC go up and down completely randomly.

Pair Corralation between Ambev SA and Latamgrowth SPAC

Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.21 times more return on investment than Latamgrowth SPAC. However, Ambev SA ADR is 4.68 times less risky than Latamgrowth SPAC. It trades about -0.1 of its potential returns per unit of risk. Latamgrowth SPAC Unit is currently generating about -0.1 per unit of risk. If you would invest  189.00  in Ambev SA ADR on October 26, 2024 and sell it today you would lose (7.00) from holding Ambev SA ADR or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.78%
Values	Daily Returns

Ambev SA ADR  vs.  Latamgrowth SPAC Unit

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.

Latamgrowth SPAC Unit

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Latamgrowth SPAC Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady technical and fundamental indicators, Latamgrowth SPAC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ambev SA and Latamgrowth SPAC

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

The idea behind Ambev SA ADR and Latamgrowth SPAC Unit 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.