Correlation Between Compania Cervecerias and Lionsgate Studios

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

Diversification Opportunities for Compania Cervecerias and Lionsgate Studios

0.48

Correlation Coefficient

Compania Cervecerias  Lionsgate Studios

Very weak diversification

The 3 months correlation between Compania and Lionsgate is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp 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 Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Lionsgate Studios go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Lionsgate Studios

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.43 times more return on investment than Lionsgate Studios. However, Compania Cervecerias Unidas is 2.31 times less risky than Lionsgate Studios. It trades about 0.34 of its potential returns per unit of risk. Lionsgate Studios Corp is currently generating about 0.08 per unit of risk. If you would invest  1,160  in Compania Cervecerias Unidas on December 22, 2024 and sell it today you would earn a total of  374.00  from holding Compania Cervecerias Unidas or generate 32.24% return on investment over 90 days.

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

Compania Cervecerias Unidas  vs.  Lionsgate Studios Corp

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 26 (%) 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.

Lionsgate Studios Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lionsgate Studios displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania Cervecerias and Lionsgate Studios

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

The idea behind Compania Cervecerias Unidas and Lionsgate Studios Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.