Correlation Between Compania Cervecerias and Hertz Global

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Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Hertz Global 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 Hertz Global 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 Hertz Global Hldgs, you can compare the effects of market volatilities on Compania Cervecerias and Hertz Global 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 Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Hertz Global.

Diversification Opportunities for Compania Cervecerias and Hertz Global

CompaniaHertzDiversified AwayCompaniaHertzDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Compania and Hertz is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Hertz Global go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Hertz Global

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.32 times more return on investment than Hertz Global. However, Compania Cervecerias Unidas is 3.17 times less risky than Hertz Global. It trades about 0.36 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.04 per unit of risk. If you would invest  1,187  in Compania Cervecerias Unidas on November 27, 2024 and sell it today you would earn a total of  111.00  from holding Compania Cervecerias Unidas or generate 9.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Compania Cervecerias Unidas  vs.  Hertz Global Hldgs

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020
JavaScript chart by amCharts 3.21.15CCU HTZWW
       Timeline  
Compania Cervecerias 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Compania Cervecerias unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1111.51212.513
Hertz Global Hldgs 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hertz Global Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22.22.42.62.83

Compania Cervecerias and Hertz Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.42-2.56-1.7-0.840.01430.961.932.93.87 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15CCU HTZWW
       Returns  

Pair Trading with Compania Cervecerias and Hertz Global

The main advantage of trading using opposite Compania Cervecerias and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global's long position.
The idea behind Compania Cervecerias Unidas and Hertz Global Hldgs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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