Correlation Between Capital Clean and Compania Cervecerias

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

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

Diversification Opportunities for Capital Clean and Compania Cervecerias

0.14

Correlation Coefficient

Capital Clean  Compania Cervecerias

Average diversification

The 3 months correlation between Capital and Compania is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Capital Clean 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 Capital Clean Energy 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 Capital Clean i.e., Capital Clean and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Capital Clean and Compania Cervecerias

Given the investment horizon of 90 days Capital Clean Energy is expected to generate 1.08 times more return on investment than Compania Cervecerias. However, Capital Clean is 1.08 times more volatile than Compania Cervecerias Unidas. It trades about 0.05 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.0 per unit of risk. If you would invest  1,220  in Capital Clean Energy on September 26, 2024 and sell it today you would earn a total of  633.00  from holding Capital Clean Energy or generate 51.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capital Clean Energy  vs.  Compania Cervecerias Unidas

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Compania Cervecerias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Cervecerias Unidas has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Capital Clean and Compania Cervecerias

The main advantage of trading using opposite Capital Clean and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean 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 Capital Clean Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.