Correlation Between JLF INVESTMENT and Ambev SA

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Can any of the company-specific risk be diversified away by investing in both JLF INVESTMENT and Ambev SA 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 JLF INVESTMENT and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLF INVESTMENT and Ambev SA, you can compare the effects of market volatilities on JLF INVESTMENT and Ambev SA 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 JLF INVESTMENT with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLF INVESTMENT and Ambev SA.

Diversification Opportunities for JLF INVESTMENT and Ambev SA

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between JLF and Ambev is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JLF INVESTMENT and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and JLF INVESTMENT 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 JLF INVESTMENT are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of JLF INVESTMENT i.e., JLF INVESTMENT and Ambev SA go up and down completely randomly.

Pair Corralation between JLF INVESTMENT and Ambev SA

Assuming the 90 days trading horizon JLF INVESTMENT is expected to under-perform the Ambev SA. In addition to that, JLF INVESTMENT is 1.64 times more volatile than Ambev SA. It trades about -0.03 of its total potential returns per unit of risk. Ambev SA is currently generating about -0.01 per unit of volatility. If you would invest  238.00  in Ambev SA on September 23, 2024 and sell it today you would lose (43.00) from holding Ambev SA or give up 18.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JLF INVESTMENT  vs.  Ambev SA

 Performance 
       Timeline  
JLF INVESTMENT 

Risk-Adjusted Performance

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Over the last 90 days JLF INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JLF INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Ambev SA 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Ambev SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ambev SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JLF INVESTMENT and Ambev SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JLF INVESTMENT and Ambev SA

The main advantage of trading using opposite JLF INVESTMENT and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLF INVESTMENT position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.
The idea behind JLF INVESTMENT and Ambev SA 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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