Correlation Between Compania Cervecerias and Compania General
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Compania General 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 Compania Cervecerias and Compania General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and Compania General de, you can compare the effects of market volatilities on Compania Cervecerias and Compania General 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 Compania Cervecerias with a short position of Compania General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Compania General.
Diversification Opportunities for Compania Cervecerias and Compania General
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compania and Compania is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Compania General de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania General and Compania Cervecerias 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 Compania Cervecerias Unidas are associated (or correlated) with Compania General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania General has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Compania General go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Compania General
Assuming the 90 days trading horizon Compania Cervecerias Unidas is expected to generate 0.53 times more return on investment than Compania General. However, Compania Cervecerias Unidas is 1.88 times less risky than Compania General. It trades about 0.01 of its potential returns per unit of risk. Compania General de is currently generating about -0.02 per unit of risk. If you would invest 526,014 in Compania Cervecerias Unidas on August 24, 2024 and sell it today you would earn a total of 21,486 from holding Compania Cervecerias Unidas or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.08% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Compania General de
Performance |
| Timeline |
| Compania Cervecerias |
| Compania General |
Compania Cervecerias and Compania General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Compania General
The main advantage of trading using opposite Compania Cervecerias and Compania General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Compania General 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 Compania General will offset losses from the drop in Compania General's long position.| Compania Cervecerias vs. Falabella | Compania Cervecerias vs. Empresas Copec SA | Compania Cervecerias vs. Cencosud | Compania Cervecerias vs. Salfacorp |
| Compania General vs. Compania Cervecerias Unidas | Compania General vs. Aguas Andinas SA | Compania General vs. Parq Arauco | Compania General vs. Enel Generacin Chile |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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