Correlation Between Compania Cervecerias and Aldel Financial

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

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

Diversification Opportunities for Compania Cervecerias and Aldel Financial

-0.33

Correlation Coefficient

Compania Cervecerias  Aldel Financial

Very good diversification

The 3 months correlation between Compania and Aldel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Compania Cervecerias 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 Compania Cervecerias Unidas are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Aldel Financial go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Aldel Financial

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 9.29 times more return on investment than Aldel Financial. However, Compania Cervecerias is 9.29 times more volatile than Aldel Financial II. It trades about 0.13 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.15 per unit of risk. If you would invest  1,088  in Compania Cervecerias Unidas on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Compania Cervecerias Unidas or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.5%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  Aldel Financial II

Compania Cervecerias

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 2 (%) 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.

Aldel Financial II

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compania Cervecerias and Aldel Financial

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

The idea behind Compania Cervecerias Unidas and Aldel Financial II 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.