Correlation Between Compania Cervecerias and Mako Mining
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Mako Mining 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 Mako Mining 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 Mako Mining Corp, you can compare the effects of market volatilities on Compania Cervecerias and Mako Mining 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 Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Mako Mining.
Diversification Opportunities for Compania Cervecerias and Mako Mining
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compania and Mako is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining 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 Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Mako Mining go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Mako Mining
Considering the 90-day investment horizon Compania Cervecerias is expected to generate 5.41 times less return on investment than Mako Mining. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 2.13 times less risky than Mako Mining. It trades about 0.03 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 222.00 in Mako Mining Corp on October 10, 2024 and sell it today you would earn a total of 26.00 from holding Mako Mining Corp or generate 11.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Compania Cervecerias Unidas vs. Mako Mining Corp
Performance |
Timeline |
Compania Cervecerias |
Mako Mining Corp |
Compania Cervecerias and Mako Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compania Cervecerias and Mako Mining
The main advantage of trading using opposite Compania Cervecerias and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining's long position.Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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