Correlation Between Compania Cervecerias and Asahi Group

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

Diversification Opportunities for Compania Cervecerias and Asahi Group

-0.53

Correlation Coefficient

Compania Cervecerias  Asahi Group

Excellent diversification

The 3 months correlation between Compania and Asahi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings 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 Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Asahi Group go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Asahi Group

Considering the 90-day investment horizon Compania Cervecerias is expected to generate 39.07 times less return on investment than Asahi Group. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 21.75 times less risky than Asahi Group. It trades about 0.04 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,610  in Asahi Group Holdings on September 3, 2024 and sell it today you would lose (2,610) from holding Asahi Group Holdings or give up 72.3% of portfolio value over 90 days.

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

Compania Cervecerias Unidas  vs.  Asahi Group Holdings

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.

Asahi Group Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Asahi Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania Cervecerias and Asahi Group

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

The idea behind Compania Cervecerias Unidas and Asahi Group Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.