Correlation Between Compania Cervecerias and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Macmahon Holdings 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 Macmahon Holdings 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on Compania Cervecerias and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Macmahon Holdings.
Diversification Opportunities for Compania Cervecerias and Macmahon Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compania and Macmahon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Macmahon Holdings
If you would invest 1,085 in Compania Cervecerias Unidas on September 1, 2024 and sell it today you would earn a total of 61.00 from holding Compania Cervecerias Unidas or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Compania Cervecerias |
| Macmahon Holdings |
Compania Cervecerias and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Macmahon Holdings
The main advantage of trading using opposite Compania Cervecerias and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Ambev SA ADR | Compania Cervecerias vs. Molson Coors Brewing |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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