Correlation Between Compania Cervecerias and Avient Corp

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

Diversification Opportunities for Compania Cervecerias and Avient Corp

0.2

Correlation Coefficient

Compania Cervecerias  Avient Corp

Modest diversification

The 3 months correlation between Compania and Avient is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Avient Corp go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Avient Corp

Considering the 90-day investment horizon Compania Cervecerias is expected to generate 21.26 times less return on investment than Avient Corp. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 1.14 times less risky than Avient Corp. It trades about 0.0 of its potential returns per unit of risk. Avient Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,216  in Avient Corp on September 16, 2024 and sell it today you would earn a total of  1,536  from holding Avient Corp or generate 47.76% return on investment over 90 days.

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

Compania Cervecerias Unidas  vs.  Avient Corp

Compania Cervecerias

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Avient Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Avient Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compania Cervecerias and Avient Corp

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

The idea behind Compania Cervecerias Unidas and Avient Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.