Correlation Between Compania Cervecerias and Amazon

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

Diversification Opportunities for Compania Cervecerias and Amazon

  Correlation Coefficient

Very good diversification

The 3 months correlation between Compania and Amazon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Amazon go up and down completely randomly.

Pair Corralation between Compania Cervecerias and Amazon

Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.73 times more return on investment than Amazon. However, Compania Cervecerias Unidas is 1.38 times less risky than Amazon. It trades about -0.05 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.06 per unit of risk. If you would invest  1,756  in Compania Cervecerias Unidas on August 31, 2022 and sell it today you would lose (562.00)  from holding Compania Cervecerias Unidas or give up 32.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Compania Cervecerias Unidas  vs.  Amazon Inc

 Performance (%) 
Compania Cervecerias 
Compania Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Compania Price Channel

Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Compania Cervecerias and Amazon Volatility Contrast

   Predicted Return Density   

Pair Trading with Compania Cervecerias and Amazon

The main advantage of trading using opposite Compania Cervecerias and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Compania Cervecerias Unidas and Amazon Inc 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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