Correlation Between General Electric and Compania Cervecerias

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

Diversification Opportunities for General Electric and Compania Cervecerias

-0.07
  Correlation Coefficient

Good diversification

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

Pair Corralation between General Electric and Compania Cervecerias

Allowing for the 90-day total investment horizon General Electric is expected to generate 1.09 times more return on investment than Compania Cervecerias. However, General Electric is 1.09 times more volatile than Compania Cervecerias Unidas. It trades about 0.03 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.01 per unit of risk. If you would invest  5,445  in General Electric on July 6, 2022 and sell it today you would earn a total of  915.00  from holding General Electric or generate 16.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

General Electric  vs.  Compania Cervecerias Unidas

 Performance (%) 
       Timeline  
General Electric 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, General Electric is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

Compania Cervecerias 
Compania Performance
0 of 100
Over the last 90 days Compania Cervecerias Unidas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Compania Price Channel

General Electric and Compania Cervecerias Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Electric and Compania Cervecerias

The main advantage of trading using opposite General Electric and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.
General Electric vs. Amazon Inc
The idea behind General Electric and Compania Cervecerias Unidas 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.
Compania Cervecerias vs. Amazon Inc
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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