Correlation Between Compania Cervecerias and Allianz SE
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Allianz SE 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 Allianz SE 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 Allianz SE, you can compare the effects of market volatilities on Compania Cervecerias and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Allianz SE.
Diversification Opportunities for Compania Cervecerias and Allianz SE
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compania and Allianz is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Allianz SE go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Allianz SE
Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 1.01 times more return on investment than Allianz SE. However, Compania Cervecerias is 1.01 times more volatile than Allianz SE. It trades about 0.32 of its potential returns per unit of risk. Allianz SE is currently generating about 0.32 per unit of risk. If you would invest 1,301 in Compania Cervecerias Unidas on December 16, 2024 and sell it today you would earn a total of 171.00 from holding Compania Cervecerias Unidas or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Allianz SE
Performance |
| Timeline |
| Compania Cervecerias |
| Allianz SE |
Compania Cervecerias and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Allianz SE
The main advantage of trading using opposite Compania Cervecerias and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.| Compania Cervecerias vs. Boston Beer | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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