Correlation Between Ambev SA and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Axalta Coating 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 Axalta Coating 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 Axalta Coating Systems, you can compare the effects of market volatilities on Ambev SA and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Axalta Coating.
Diversification Opportunities for Ambev SA and Axalta Coating
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambev and Axalta is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Ambev SA i.e., Ambev SA and Axalta Coating go up and down completely randomly.
Pair Corralation between Ambev SA and Axalta Coating
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Axalta Coating. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.0 times less risky than Axalta Coating. The stock trades about -0.06 of its potential returns per unit of risk. The Axalta Coating Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,262 in Axalta Coating Systems on September 2, 2024 and sell it today you would earn a total of 784.00 from holding Axalta Coating Systems or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Axalta Coating Systems
Performance |
| Timeline |
| Ambev SA ADR |
| Axalta Coating Systems |
Ambev SA and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Axalta Coating
The main advantage of trading using opposite Ambev SA and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating'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 |
| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
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 Stocks Directory module to find actively traded stocks across global markets.
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