Correlation Between Ambev SA and Ubisoft Entertainment

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

Diversification Opportunities for Ambev SA and Ubisoft Entertainment

0.59
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Ambev SA and Ubisoft Entertainment

Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.66 times more return on investment than Ubisoft Entertainment. However, Ambev SA ADR is 1.51 times less risky than Ubisoft Entertainment. It trades about -0.15 of its potential returns per unit of risk. Ubisoft Entertainment is currently generating about -0.27 per unit of risk. If you would invest  190.00  in Ambev SA ADR on October 25, 2024 and sell it today you would lose (10.00) from holding Ambev SA ADR or give up 5.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ambev SA ADR  vs.  Ubisoft Entertainment

 Performance 
       Timeline  
Ambev SA ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Ubisoft Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ambev SA and Ubisoft Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ambev SA and Ubisoft Entertainment

The main advantage of trading using opposite Ambev SA and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.
The idea behind Ambev SA ADR and Ubisoft Entertainment 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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