Correlation Between Compania Cervecerias and Kolibri Global

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

Diversification Opportunities for Compania Cervecerias and Kolibri Global

0.68

Correlation Coefficient

Compania Cervecerias  Kolibri Global

Poor diversification

The 3 months correlation between Compania and Kolibri is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Kolibri Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolibri Global Energy 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 Kolibri Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolibri Global Energy has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Kolibri Global go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Kolibri Global

Considering the 90-day investment horizon Compania Cervecerias is expected to generate 18.92 times less return on investment than Kolibri Global. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 2.31 times less risky than Kolibri Global. It trades about 0.06 of its potential returns per unit of risk. Kolibri Global Energy is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  324.00  in Kolibri Global Energy on October 26, 2024 and sell it today you would earn a total of  423.00  from holding Kolibri Global Energy or generate 130.56% return on investment over 90 days.

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

Compania Cervecerias Unidas  vs.  Kolibri Global Energy

Compania Cervecerias

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 4 (%) 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.

Kolibri Global Energy

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kolibri Global Energy are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Kolibri Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania Cervecerias and Kolibri Global

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

The idea behind Compania Cervecerias Unidas and Kolibri Global Energy 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.