Correlation Between Compania Cervecerias and La Rosa

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

Diversification Opportunities for Compania Cervecerias and La Rosa

-0.22

Correlation Coefficient

Compania Cervecerias  La Rosa

Very good diversification

The 3 months correlation between Compania and LRHC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa Holdings 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 La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and La Rosa go up and down completely randomly.

Pair Corralation between Compania Cervecerias and La Rosa

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to under-perform the La Rosa. But the stock apears to be less risky and, when comparing its historical volatility, Compania Cervecerias Unidas is 8.57 times less risky than La Rosa. The stock trades about -0.05 of its potential returns per unit of risk. The La Rosa Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  500.00  in La Rosa Holdings on September 12, 2024 and sell it today you would lose (430.00) from holding La Rosa Holdings or give up 86.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.09%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  La Rosa Holdings

Compania Cervecerias

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias unveiled solid returns over the last few months and may actually be approaching a breakup point.

La Rosa Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in La Rosa Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, La Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania Cervecerias and La Rosa

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

The idea behind Compania Cervecerias Unidas and La Rosa Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.