Correlation Between 00108WAN0 and Ambev SA

Can any of the company-specific risk be diversified away by investing in both 00108WAN0 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 00108WAN0 and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP 345 15 MAY 51 and Ambev SA ADR, you can compare the effects of market volatilities on 00108WAN0 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 00108WAN0 with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAN0 and Ambev SA.

Diversification Opportunities for 00108WAN0 and Ambev SA

-0.24

Correlation Coefficient

00108WAN0  Ambev SA

Very good diversification

The 3 months correlation between 00108WAN0 and Ambev is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AEP 345 15 MAY 51 and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and 00108WAN0 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 AEP 345 15 MAY 51 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 ADR has no effect on the direction of 00108WAN0 i.e., 00108WAN0 and Ambev SA go up and down completely randomly.

Pair Corralation between 00108WAN0 and Ambev SA

Assuming the 90 days trading horizon 00108WAN0 is expected to generate 1.69 times less return on investment than Ambev SA. In addition to that, 00108WAN0 is 1.53 times more volatile than Ambev SA ADR. It trades about 0.08 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about 0.21 per unit of volatility. If you would invest  188.00  in Ambev SA ADR on December 23, 2024 and sell it today you would earn a total of  48.00  from holding Ambev SA ADR or generate 25.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

AEP 345 15 MAY 51  vs.  Ambev SA ADR

AEP 345 15

Risk-Adjusted Performance

Modest

Over the last 90 days AEP 345 15 MAY 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, 00108WAN0 sustained solid returns over the last few months and may actually be approaching a breakup point.

Ambev SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ambev SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 00108WAN0 and Ambev SA

The main advantage of trading using opposite 00108WAN0 and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAN0 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 AEP 345 15 MAY 51 and Ambev SA ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.