Correlation Between Ambev SA and VHAI
Can any of the company-specific risk be diversified away by investing in both Ambev SA and VHAI 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 VHAI 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 VHAI, you can compare the effects of market volatilities on Ambev SA and VHAI 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 VHAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and VHAI.
Diversification Opportunities for Ambev SA and VHAI
Poor diversification
The 3 months correlation between Ambev and VHAI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Ambev SA i.e., Ambev SA and VHAI go up and down completely randomly.
Pair Corralation between Ambev SA and VHAI
Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.13 times more return on investment than VHAI. However, Ambev SA ADR is 7.86 times less risky than VHAI. It trades about -0.02 of its potential returns per unit of risk. VHAI is currently generating about -0.23 per unit of risk. If you would invest 273.00 in Ambev SA ADR on August 28, 2024 and sell it today you would lose (56.00) from holding Ambev SA ADR or give up 20.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.29% |
| Values | Daily Returns |
Ambev SA ADR vs. VHAI
Performance |
| Timeline |
| Ambev SA ADR |
| VHAI |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ambev SA and VHAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and VHAI
The main advantage of trading using opposite Ambev SA and VHAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, VHAI 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 VHAI will offset losses from the drop in VHAI's long position.| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
| VHAI vs. Cracker Barrel Old | VHAI vs. First Watch Restaurant | VHAI vs. Biglari Holdings | VHAI vs. Lincoln Educational Services |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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