Correlation Between Ambev SA and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Freedom Holding 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 Freedom Holding 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 Freedom Holding Corp, you can compare the effects of market volatilities on Ambev SA and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Freedom Holding.
Diversification Opportunities for Ambev SA and Freedom Holding
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ambev and Freedom is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Ambev SA i.e., Ambev SA and Freedom Holding go up and down completely randomly.
Pair Corralation between Ambev SA and Freedom Holding
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Freedom Holding. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.19 times less risky than Freedom Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Freedom Holding Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,978 in Freedom Holding Corp on September 2, 2024 and sell it today you would earn a total of 3,910 from holding Freedom Holding Corp or generate 49.01% 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. Freedom Holding Corp
Performance |
| Timeline |
| Ambev SA ADR |
| Freedom Holding Corp |
Ambev SA and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Freedom Holding
The main advantage of trading using opposite Ambev SA and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding'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 |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |