Correlation Between Compania Cervecerias and TFI International

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

Diversification Opportunities for Compania Cervecerias and TFI International

-0.06

Correlation Coefficient

Compania Cervecerias  TFI International

Good diversification

The 3 months correlation between Compania and TFI is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and TFI International go up and down completely randomly.

Pair Corralation between Compania Cervecerias and TFI International

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.88 times more return on investment than TFI International. However, Compania Cervecerias Unidas is 1.14 times less risky than TFI International. It trades about 0.1 of its potential returns per unit of risk. TFI International is currently generating about 0.01 per unit of risk. If you would invest  1,042  in Compania Cervecerias Unidas on September 19, 2024 and sell it today you would earn a total of  103.00  from holding Compania Cervecerias Unidas or generate 9.88% 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.  TFI International

Compania Cervecerias

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TFI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, TFI International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Compania Cervecerias and TFI International

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

The idea behind Compania Cervecerias Unidas and TFI International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.