Correlation Between Delek Drilling and Compania Cervecerias

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

By analyzing existing cross correlation between Delek Drilling and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Delek Drilling and Compania Cervecerias 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 Delek Drilling with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and Compania Cervecerias.

Diversification Opportunities for Delek Drilling and Compania Cervecerias

0.56

Correlation Coefficient

Delek Drilling  Compania Cervecerias

Very weak diversification

The 3 months correlation between Delek and Compania is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Delek Drilling 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 Delek Drilling are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Delek Drilling i.e., Delek Drilling and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Delek Drilling and Compania Cervecerias

Assuming the 90 days horizon Delek Drilling is expected to generate 3.72 times less return on investment than Compania Cervecerias. In addition to that, Delek Drilling is 1.42 times more volatile than Compania Cervecerias Unidas. It trades about 0.07 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.35 per unit of volatility. If you would invest  1,131  in Compania Cervecerias Unidas on December 29, 2024 and sell it today you would earn a total of  401.00  from holding Compania Cervecerias Unidas or generate 35.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Delek Drilling   vs.  Compania Cervecerias Unidas

Delek Drilling

Risk-Adjusted Performance

Modest

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

Compania Cervecerias

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Drilling and Compania Cervecerias

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

The idea behind Delek Drilling and Compania Cervecerias Unidas 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.