Correlation Between Ambev SA and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Tokyo Electron 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 Tokyo Electron 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 Tokyo Electron, you can compare the effects of market volatilities on Ambev SA and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Tokyo Electron.
Diversification Opportunities for Ambev SA and Tokyo Electron
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambev and Tokyo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Ambev SA i.e., Ambev SA and Tokyo Electron go up and down completely randomly.
Pair Corralation between Ambev SA and Tokyo Electron
Given the investment horizon of 90 days Ambev SA is expected to generate 1.3 times less return on investment than Tokyo Electron. But when comparing it to its historical volatility, Ambev SA ADR is 1.91 times less risky than Tokyo Electron. It trades about 0.14 of its potential returns per unit of risk. Tokyo Electron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,720 in Tokyo Electron on September 12, 2024 and sell it today you would earn a total of 911.00 from holding Tokyo Electron or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA ADR vs. Tokyo Electron
Performance |
| Timeline |
| Ambev SA ADR |
| Tokyo Electron |
Ambev SA and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Tokyo Electron
The main advantage of trading using opposite Ambev SA and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Molson Coors Beverage |
| Tokyo Electron vs. Asm Pacific Technology | Tokyo Electron vs. Lasertec | Tokyo Electron vs. Sumco Corp ADR | Tokyo Electron vs. AIXTRON SE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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