Correlation Between Axalta Coating and Compania Cervecerias

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Compania Cervecerias 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 Axalta Coating and Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axalta Coating Systems and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Axalta Coating and Compania Cervecerias 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 Axalta Coating with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Compania Cervecerias.

Diversification Opportunities for Axalta Coating and Compania Cervecerias

-0.51

Correlation Coefficient

Axalta Coating  Compania Cervecerias

Excellent diversification

The 3 months correlation between Axalta and Compania is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Axalta Coating i.e., Axalta Coating and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Axalta Coating and Compania Cervecerias

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 1.28 times more return on investment than Compania Cervecerias. However, Axalta Coating is 1.28 times more volatile than Compania Cervecerias Unidas. It trades about 0.23 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.02 per unit of risk. If you would invest  3,444  in Axalta Coating Systems on October 20, 2024 and sell it today you would earn a total of  184.00  from holding Axalta Coating Systems or generate 5.34% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Compania Cervecerias Unidas

Axalta Coating Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Compania Cervecerias

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Compania Cervecerias is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Axalta Coating and Compania Cervecerias

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

The idea behind Axalta Coating Systems and Compania Cervecerias Unidas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.