Correlation Between Ambev SA and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Ambev SA and HEINEKEN 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 HEINEKEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA and HEINEKEN SP ADR, you can compare the effects of market volatilities on Ambev SA and HEINEKEN 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 HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and HEINEKEN.
Diversification Opportunities for Ambev SA and HEINEKEN
Weak diversification
The 3 months correlation between Ambev and HEINEKEN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 are associated (or correlated) with HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Ambev SA i.e., Ambev SA and HEINEKEN go up and down completely randomly.
Pair Corralation between Ambev SA and HEINEKEN
Assuming the 90 days trading horizon Ambev SA is expected to under-perform the HEINEKEN. In addition to that, Ambev SA is 2.84 times more volatile than HEINEKEN SP ADR. It trades about -0.08 of its total potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.06 per unit of volatility. If you would invest 3,420 in HEINEKEN SP ADR on September 23, 2024 and sell it today you would lose (40.00) from holding HEINEKEN SP ADR or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambev SA vs. HEINEKEN SP ADR
Performance |
| Timeline |
| Ambev SA |
| HEINEKEN SP ADR |
Ambev SA and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and HEINEKEN
The main advantage of trading using opposite Ambev SA and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, HEINEKEN 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 HEINEKEN will offset losses from the drop in HEINEKEN's long position.| Ambev SA vs. KIMBALL ELECTRONICS | Ambev SA vs. TT Electronics PLC | Ambev SA vs. Meiko Electronics Co | Ambev SA vs. STMICROELECTRONICS |
| HEINEKEN vs. FOMECONMEXSAB DCV UTS | HEINEKEN vs. Heineken NV | HEINEKEN vs. Ambev SA | HEINEKEN vs. Heineken Holding NV |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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