Correlation Between Compania Cervecerias and Catalent

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

Diversification Opportunities for Compania Cervecerias and Catalent

0.0

Correlation Coefficient

Compania Cervecerias  Catalent

Pay attention - limited upside

The 3 months correlation between Compania and Catalent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Catalent go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Catalent

If you would invest  1,158  in Compania Cervecerias Unidas on December 26, 2024 and sell it today you would earn a total of  377.00  from holding Compania Cervecerias Unidas or generate 32.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  Catalent

Compania Cervecerias

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compania Cervecerias and Catalent

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

The idea behind Compania Cervecerias Unidas and Catalent 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..