Correlation Between Compania Cervecerias and PAO NOVATEK

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

Diversification Opportunities for Compania Cervecerias and PAO NOVATEK

0.0

Correlation Coefficient

Compania Cervecerias  PAO NOVATEK

Pay attention - limited upside

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

Pair Corralation between Compania Cervecerias and PAO NOVATEK

If you would invest  1,231  in Compania Cervecerias Unidas on September 24, 2024 and sell it today you would lose (78.00) from holding Compania Cervecerias Unidas or give up 6.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	10.04%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  PAO NOVATEK

Compania Cervecerias

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PAO NOVATEK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAO NOVATEK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PAO NOVATEK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compania Cervecerias and PAO NOVATEK

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

The idea behind Compania Cervecerias Unidas and PAO NOVATEK 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 CEOs Directory module to screen CEOs from public companies around the world.