Correlation Between Advanced Micro and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and Ambev SA 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 Advanced Micro and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Ambev SA ADR, you can compare the effects of market volatilities on Advanced Micro and Ambev SA 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 Advanced Micro with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Ambev SA.
Diversification Opportunities for Advanced Micro and Ambev SA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Ambev is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Advanced Micro i.e., Advanced Micro and Ambev SA go up and down completely randomly.
Pair Corralation between Advanced Micro and Ambev SA
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Ambev SA. In addition to that, Advanced Micro is 2.07 times more volatile than Ambev SA ADR. It trades about -0.13 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about -0.07 per unit of volatility. If you would invest 225.00 in Ambev SA ADR on August 24, 2024 and sell it today you would lose (6.00) from holding Ambev SA ADR or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Ambev SA ADR
Performance |
| Timeline |
| Advanced Micro Devices |
| Ambev SA ADR |
Advanced Micro and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Ambev SA
The main advantage of trading using opposite Advanced Micro and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Advanced Micro vs. Eshallgo Class A | Advanced Micro vs. Amtech Systems | Advanced Micro vs. Gold Fields Ltd | Advanced Micro vs. Aegean Airlines SA |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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