Correlation Between Holdco Nuvo and Compania Cervecerias

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

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

Diversification Opportunities for Holdco Nuvo and Compania Cervecerias

-0.76

Correlation Coefficient

Holdco Nuvo  Compania Cervecerias

Pay attention - limited upside

The 3 months correlation between Holdco and Compania is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Holdco Nuvo Group and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Holdco Nuvo 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 Holdco Nuvo Group 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 Holdco Nuvo i.e., Holdco Nuvo and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Holdco Nuvo and Compania Cervecerias

Given the investment horizon of 90 days Holdco Nuvo Group is expected to generate 76.4 times more return on investment than Compania Cervecerias. However, Holdco Nuvo is 76.4 times more volatile than Compania Cervecerias Unidas. It trades about 0.11 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.34 per unit of risk. If you would invest  0.30  in Holdco Nuvo Group on December 20, 2024 and sell it today you would lose (0.21) from holding Holdco Nuvo Group or give up 70.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Holdco Nuvo Group  vs.  Compania Cervecerias Unidas

Holdco Nuvo Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holdco Nuvo Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Holdco Nuvo displayed solid returns over the last few months and may actually be approaching a breakup point.

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 26 (%) 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 Holdco Nuvo and Compania Cervecerias

The main advantage of trading using opposite Holdco Nuvo and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holdco Nuvo 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 Holdco Nuvo Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.