Correlation Between Grupo Hotelero and Ambev SA

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

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

Diversification Opportunities for Grupo Hotelero and Ambev SA

-0.04

Correlation Coefficient

Grupo Hotelero  Ambev SA

Good diversification

The 3 months correlation between Grupo and Ambev is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and Grupo Hotelero 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 Grupo Hotelero Santa 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 has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Ambev SA go up and down completely randomly.

Pair Corralation between Grupo Hotelero and Ambev SA

Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to generate 1.95 times more return on investment than Ambev SA. However, Grupo Hotelero is 1.95 times more volatile than Ambev SA. It trades about 0.0 of its potential returns per unit of risk. Ambev SA is currently generating about -0.17 per unit of risk. If you would invest  389.00  in Grupo Hotelero Santa on October 22, 2024 and sell it today you would lose (1.00) from holding Grupo Hotelero Santa or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Grupo Hotelero Santa  vs.  Ambev SA

Grupo Hotelero Santa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Hotelero Santa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Grupo Hotelero may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ambev SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambev SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Grupo Hotelero and Ambev SA

The main advantage of trading using opposite Grupo Hotelero and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero 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 Grupo Hotelero Santa and Ambev SA 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.