Correlation Between Compania Cervecerias and Global Ship

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

Diversification Opportunities for Compania Cervecerias and Global Ship

0.55

Correlation Coefficient

Compania Cervecerias  Global Ship

Very weak diversification

The 3 months correlation between Compania and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Global Ship go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Global Ship

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 2.15 times more return on investment than Global Ship. However, Compania Cervecerias is 2.15 times more volatile than Global Ship Lease. It trades about 0.33 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.03 per unit of risk. 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	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  Global Ship Lease

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.

Global Ship Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compania Cervecerias and Global Ship

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

The idea behind Compania Cervecerias Unidas and Global Ship Lease 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.