Correlation Between Cromwell Property and Ambev SA

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

By analyzing existing cross correlation between Cromwell Property Group and Ambev SA ADR, you can compare the effects of market volatilities on Cromwell Property and Ambev SA 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 Cromwell Property with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cromwell Property and Ambev SA.

Diversification Opportunities for Cromwell Property and Ambev SA

0.0

Correlation Coefficient

Cromwell Property  Ambev SA

Pay attention - limited upside

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

Pair Corralation between Cromwell Property and Ambev SA

If you would invest  193.00  in Ambev SA ADR on December 20, 2024 and sell it today you would earn a total of  44.00  from holding Ambev SA ADR or generate 22.8% return on investment over 90 days.

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

Cromwell Property Group  vs.  Ambev SA ADR

Cromwell Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cromwell Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Cromwell Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ambev SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ambev SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cromwell Property and Ambev SA

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

The idea behind Cromwell Property Group and Ambev SA ADR 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.