Correlation Between Ambev SA and XIAO I
Can any of the company-specific risk be diversified away by investing in both Ambev SA and XIAO I 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 Ambev SA and XIAO I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and XIAO I American, you can compare the effects of market volatilities on Ambev SA and XIAO I 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 Ambev SA with a short position of XIAO I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and XIAO I.
Diversification Opportunities for Ambev SA and XIAO I
Good diversification
The 3 months correlation between Ambev and XIAO is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American and Ambev SA 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 Ambev SA ADR are associated (or correlated) with XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of Ambev SA i.e., Ambev SA and XIAO I go up and down completely randomly.
Pair Corralation between Ambev SA and XIAO I
Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.2 times more return on investment than XIAO I. However, Ambev SA ADR is 5.1 times less risky than XIAO I. It trades about -0.06 of its potential returns per unit of risk. XIAO I American is currently generating about -0.02 per unit of risk. If you would invest 269.00 in Ambev SA ADR on September 2, 2024 and sell it today you would lose (57.00) from holding Ambev SA ADR or give up 21.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. XIAO I American
Performance |
| Timeline |
| Ambev SA ADR |
| XIAO I American |
Ambev SA and XIAO I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and XIAO I
The main advantage of trading using opposite Ambev SA and XIAO I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, XIAO I 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 XIAO I will offset losses from the drop in XIAO I's long position.| Ambev SA vs. Compania Cervecerias Unidas | Ambev SA vs. Molson Coors Brewing | Ambev SA vs. Suntory Beverage Food | Ambev SA vs. Carlsberg AS |
| XIAO I vs. Jacobs Solutions | XIAO I vs. Highway Holdings Limited | XIAO I vs. ChampionX | XIAO I vs. Summit Materials |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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