Correlation Between Compania Cervecerias and ENELIM

Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and ENELIM 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 ENELIM 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 ENELIM 71 14 OCT 27, you can compare the effects of market volatilities on Compania Cervecerias and ENELIM 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 ENELIM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and ENELIM.

Diversification Opportunities for Compania Cervecerias and ENELIM

-0.22

Correlation Coefficient

Compania Cervecerias  ENELIM

Very good diversification

The 3 months correlation between Compania and ENELIM is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and ENELIM 71 14 OCT 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENELIM 71 14 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 ENELIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENELIM 71 14 has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and ENELIM go up and down completely randomly.

Pair Corralation between Compania Cervecerias and ENELIM

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.35 times more return on investment than ENELIM. However, Compania Cervecerias Unidas is 2.84 times less risky than ENELIM. It trades about 0.16 of its potential returns per unit of risk. ENELIM 71 14 OCT 27 is currently generating about 0.03 per unit of risk. If you would invest  1,113  in Compania Cervecerias Unidas on September 27, 2024 and sell it today you would earn a total of  43.00  from holding Compania Cervecerias Unidas or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.82%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  ENELIM 71 14 OCT 27

Compania Cervecerias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Cervecerias Unidas has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ENELIM 71 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENELIM 71 14 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENELIM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compania Cervecerias and ENELIM

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

The idea behind Compania Cervecerias Unidas and ENELIM 71 14 OCT 27 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.