Correlation Between VirnetX Holding and Ambev SA

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

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

Diversification Opportunities for VirnetX Holding and Ambev SA

-0.51

Correlation Coefficient

VirnetX Holding  Ambev SA

Excellent diversification

The 3 months correlation between VirnetX and Ambev is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding VirnetX Holding Corp 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 VirnetX Holding 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 VirnetX Holding Corp 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 VirnetX Holding i.e., VirnetX Holding and Ambev SA go up and down completely randomly.

Pair Corralation between VirnetX Holding and Ambev SA

Considering the 90-day investment horizon VirnetX Holding Corp is expected to under-perform the Ambev SA. In addition to that, VirnetX Holding is 4.01 times more volatile than Ambev SA ADR. It trades about -0.01 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about -0.01 per unit of volatility. If you would invest  238.00  in Ambev SA ADR on December 4, 2024 and sell it today you would lose (30.00) from holding Ambev SA ADR or give up 12.61% of portfolio value over 90 days.

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

VirnetX Holding Corp  vs.  Ambev SA ADR

VirnetX Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ambev SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambev SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Ambev SA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with VirnetX Holding and Ambev SA

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

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..