Correlation Between Compagnie and Anheuser Busch

Can any of the company-specific risk be diversified away by investing in both Compagnie and Anheuser Busch 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 Compagnie and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compagnie d Entreprises and Anheuser Busch Inbev, you can compare the effects of market volatilities on Compagnie and Anheuser Busch 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 Compagnie with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Anheuser Busch.

Diversification Opportunities for Compagnie and Anheuser Busch

-0.14

Correlation Coefficient

Compagnie  Anheuser Busch

Good diversification

The 3 months correlation between Compagnie and Anheuser is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie d Entreprises and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Compagnie 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 Compagnie d Entreprises are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Compagnie i.e., Compagnie and Anheuser Busch go up and down completely randomly.

Pair Corralation between Compagnie and Anheuser Busch

Assuming the 90 days trading horizon Compagnie is expected to generate 3.12 times less return on investment than Anheuser Busch. But when comparing it to its historical volatility, Compagnie d Entreprises is 1.32 times less risky than Anheuser Busch. It trades about 0.17 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  4,749  in Anheuser Busch Inbev on November 28, 2024 and sell it today you would earn a total of  483.00  from holding Anheuser Busch Inbev or generate 10.17% return on investment over 90 days.

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

Compagnie d Entreprises  vs.  Anheuser Busch Inbev

Compagnie d Entreprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie d Entreprises are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Anheuser Busch Inbev

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Anheuser Busch is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compagnie and Anheuser Busch

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

The idea behind Compagnie d Entreprises and Anheuser Busch Inbev 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..