Correlation Between Anheuser Busch and QRF SCA

Can any of the company-specific risk be diversified away by investing in both Anheuser Busch and QRF SCA 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 Anheuser Busch and QRF SCA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anheuser Busch Inbev and QRF SCA, you can compare the effects of market volatilities on Anheuser Busch and QRF SCA 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 Anheuser Busch with a short position of QRF SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and QRF SCA.

Diversification Opportunities for Anheuser Busch and QRF SCA

0.1

Correlation Coefficient

Anheuser Busch  QRF SCA

Average diversification

The 3 months correlation between Anheuser and QRF is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and QRF SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRF SCA and Anheuser Busch 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 Anheuser Busch Inbev are associated (or correlated) with QRF SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRF SCA has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and QRF SCA go up and down completely randomly.

Pair Corralation between Anheuser Busch and QRF SCA

Assuming the 90 days trading horizon Anheuser Busch Inbev is expected to generate 1.17 times more return on investment than QRF SCA. However, Anheuser Busch is 1.17 times more volatile than QRF SCA. It trades about 0.19 of its potential returns per unit of risk. QRF SCA is currently generating about 0.02 per unit of risk. If you would invest  4,825  in Anheuser Busch Inbev on December 21, 2024 and sell it today you would earn a total of  981.00  from holding Anheuser Busch Inbev or generate 20.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Anheuser Busch Inbev  vs.  QRF SCA

Anheuser Busch Inbev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

QRF SCA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QRF SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, QRF SCA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Anheuser Busch and QRF SCA

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

The idea behind Anheuser Busch Inbev and QRF SCA 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.