Correlation Between Compania Cervecerias and Liberty Resources

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

Diversification Opportunities for Compania Cervecerias and Liberty Resources

0.0

Correlation Coefficient

Compania Cervecerias  Liberty Resources

Pay attention - limited upside

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

Pair Corralation between Compania Cervecerias and Liberty Resources

If you would invest  1,131  in Compania Cervecerias Unidas on December 28, 2024 and sell it today you would earn a total of  401.00  from holding Compania Cervecerias Unidas or generate 35.46% 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.  Liberty Resources Acquisition

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 28 (%) 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.

Liberty Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liberty Resources Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Liberty Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Compania Cervecerias and Liberty Resources

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

The idea behind Compania Cervecerias Unidas and Liberty Resources Acquisition 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 Valuation module to check real value of public entities based on technical and fundamental data.