Correlation Between Liberty Resources and Compania Cervecerias

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

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

Diversification Opportunities for Liberty Resources and Compania Cervecerias

-0.49

Correlation Coefficient

Liberty Resources  Compania Cervecerias

Very good diversification

The 3 months correlation between Liberty and Compania is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Resources Acquisition and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Liberty Resources 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 Liberty Resources Acquisition 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 Liberty Resources i.e., Liberty Resources and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Liberty Resources and Compania Cervecerias

If you would invest  5.00  in Liberty Resources Acquisition on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Liberty Resources Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Liberty Resources Acquisition  vs.  Compania Cervecerias Unidas

Liberty Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Resources Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Liberty Resources is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Compania Cervecerias

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Liberty Resources and Compania Cervecerias

The main advantage of trading using opposite Liberty Resources and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Resources 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 Liberty Resources Acquisition 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.