Correlation Between Compania Cervecerias and Where Food

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

Diversification Opportunities for Compania Cervecerias and Where Food

0.53

Correlation Coefficient

Compania Cervecerias  Where Food

Very weak diversification

The 3 months correlation between Compania and Where is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes 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 Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Where Food go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Where Food

Considering the 90-day investment horizon Compania Cervecerias is expected to generate 1.97 times less return on investment than Where Food. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 1.58 times less risky than Where Food. It trades about 0.01 of its potential returns per unit of risk. Where Food Comes is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,225  in Where Food Comes on September 15, 2024 and sell it today you would earn a total of  5.00  from holding Where Food Comes or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Compania Cervecerias Unidas  vs.  Where Food Comes

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.

Where Food Comes

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Where Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania Cervecerias and Where Food

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

The idea behind Compania Cervecerias Unidas and Where Food Comes 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.