Correlation Between Concentra Group and Ambev SA

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

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

Diversification Opportunities for Concentra Group and Ambev SA

-0.12

Correlation Coefficient

Concentra Group  Ambev SA

Good diversification

The 3 months correlation between Concentra and Ambev is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Concentra Group Holdings 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 Concentra Group 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 Concentra Group Holdings 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 Concentra Group i.e., Concentra Group and Ambev SA go up and down completely randomly.

Pair Corralation between Concentra Group and Ambev SA

Considering the 90-day investment horizon Concentra Group is expected to generate 2.95 times less return on investment than Ambev SA. In addition to that, Concentra Group is 1.04 times more volatile than Ambev SA ADR. It trades about 0.07 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about 0.2 per unit of volatility. If you would invest  183.00  in Ambev SA ADR on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Ambev SA ADR or generate 24.59% return on investment over 90 days.

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

Concentra Group Holdings  vs.  Ambev SA ADR

Concentra Group Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Concentra Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Concentra Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ambev SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating 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 Concentra Group and Ambev SA

The main advantage of trading using opposite Concentra Group and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concentra Group 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 Concentra Group Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.