Correlation Between Compania Cervecerias and EON Resources

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

Diversification Opportunities for Compania Cervecerias and EON Resources

-0.39

Correlation Coefficient

Compania Cervecerias  EON Resources

Very good diversification

The 3 months correlation between Compania and EON is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and EON Resources go up and down completely randomly.

Pair Corralation between Compania Cervecerias and EON Resources

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.19 times more return on investment than EON Resources. However, Compania Cervecerias Unidas is 5.29 times less risky than EON Resources. It trades about 0.04 of its potential returns per unit of risk. EON Resources is currently generating about -0.09 per unit of risk. If you would invest  1,094  in Compania Cervecerias Unidas on October 8, 2024 and sell it today you would earn a total of  28.00  from holding Compania Cervecerias Unidas or generate 2.56% 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.  EON Resources

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.

EON Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Compania Cervecerias and EON Resources

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

The idea behind Compania Cervecerias Unidas and EON Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.