Correlation Between Compania Cervecerias and Natures Miracle

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

Diversification Opportunities for Compania Cervecerias and Natures Miracle

-0.41

Correlation Coefficient

Compania Cervecerias  Natures Miracle

Very good diversification

The 3 months correlation between Compania and Natures is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding 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 Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Natures Miracle go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Natures Miracle

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.05 times more return on investment than Natures Miracle. However, Compania Cervecerias Unidas is 21.01 times less risky than Natures Miracle. It trades about 0.21 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about -0.27 per unit of risk. If you would invest  1,158  in Compania Cervecerias Unidas on October 26, 2024 and sell it today you would earn a total of  45.00  from holding Compania Cervecerias Unidas or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.21%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  Natures Miracle Holding

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.

Natures Miracle Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Miracle Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Compania Cervecerias and Natures Miracle

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

The idea behind Compania Cervecerias Unidas and Natures Miracle Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.