Correlation Between Ambev SA and Coca Cola

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ambev SA and Coca Cola 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 Ambev SA and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and Coca-Cola, you can compare the effects of market volatilities on Ambev SA and Coca Cola 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 Ambev SA with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Coca Cola.

Diversification Opportunities for Ambev SA and Coca Cola

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ambev and Coca Cola is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Ambev SA 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 Ambev SA ADR are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca-Cola has no effect on the direction of Ambev SA i.e., Ambev SA and Coca Cola go up and down completely randomly.

Pair Corralation between Ambev SA and Coca Cola

Given the investment horizon of 90 days Ambev SA ADR is expected to generate 2.09 times more return on investment than Coca Cola. However, Ambev SA is 2.09 times more volatile than Coca-Cola. It trades about 0.04 of its potential returns per unit of risk. Coca-Cola is currently generating about 0.04 per unit of risk. If you would invest  216.00  in Ambev SA ADR on June 26, 2022 and sell it today you would earn a total of  72.00  from holding Ambev SA ADR or generate 33.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ambev SA ADR  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Ambev SA ADR 
Ambev Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish technical and fundamental indicators, Ambev SA may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Ambev Price Channel

Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Coca Cola Price Channel

Ambev SA and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ambev SA and Coca Cola

The main advantage of trading using opposite Ambev SA and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.
Ambev SA vs. Sigma Lithium Corp
The idea behind Ambev SA ADR and Coca-Cola 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.
Coca Cola vs. Industrias Bachoco SA
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Other Complementary Tools

Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go