Correlation Between Ambev SA and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Ambev SA and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on Ambev SA and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and National CineMedia.
Diversification Opportunities for Ambev SA and National CineMedia
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambev and National is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Ambev SA i.e., Ambev SA and National CineMedia go up and down completely randomly.
Pair Corralation between Ambev SA and National CineMedia
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the National CineMedia. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.5 times less risky than National CineMedia. The stock trades about -0.06 of its potential returns per unit of risk. The National CineMedia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 674.00 in National CineMedia on September 2, 2024 and sell it today you would earn a total of 21.00 from holding National CineMedia or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. National CineMedia
Performance |
| Timeline |
| Ambev SA ADR |
| National CineMedia |
Ambev SA and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and National CineMedia
The main advantage of trading using opposite Ambev SA and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia'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 |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |