Correlation Between Teleflex Incorporated and Compania Cervecerias

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

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

Diversification Opportunities for Teleflex Incorporated and Compania Cervecerias

-0.17

Correlation Coefficient

Teleflex Incorporated  Compania Cervecerias

Good diversification

The 3 months correlation between Teleflex and Compania is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and Compania Cervecerias

Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Compania Cervecerias. In addition to that, Teleflex Incorporated is 1.07 times more volatile than Compania Cervecerias Unidas. It trades about -0.03 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.0 per unit of volatility. If you would invest  1,231  in Compania Cervecerias Unidas on September 23, 2024 and sell it today you would lose (64.00) from holding Compania Cervecerias Unidas or give up 5.2% of portfolio value over 90 days.

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

Teleflex Incorporated  vs.  Compania Cervecerias Unidas

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Compania Cervecerias

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Teleflex Incorporated and Compania Cervecerias

The main advantage of trading using opposite Teleflex Incorporated and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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 Teleflex Incorporated 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 Global Correlations module to find global opportunities by holding instruments from different markets.