Correlation Between Compania Cervecerias and Alvotech

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

Diversification Opportunities for Compania Cervecerias and Alvotech

-0.17

Correlation Coefficient

Compania Cervecerias  Alvotech

Good diversification

The 3 months correlation between Compania and Alvotech is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech 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 Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Alvotech go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Alvotech

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to under-perform the Alvotech. But the stock apears to be less risky and, when comparing its historical volatility, Compania Cervecerias Unidas is 1.46 times less risky than Alvotech. The stock trades about 0.0 of its potential returns per unit of risk. The Alvotech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Alvotech on October 10, 2024 and sell it today you would earn a total of  83.00  from holding Alvotech or generate 6.68% return on investment over 90 days.

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

Compania Cervecerias Unidas  vs.  Alvotech

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.

Alvotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Compania Cervecerias and Alvotech

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

The idea behind Compania Cervecerias Unidas and Alvotech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.