Correlation Between ATT and Compania Cervecerias

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

Diversification Opportunities for ATT and Compania Cervecerias

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between ATT and Compania is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and ATT 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 ATT Inc 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 ATT i.e., ATT and Compania Cervecerias go up and down completely randomly.

Pair Corralation between ATT and Compania Cervecerias

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.75 times more return on investment than Compania Cervecerias. However, ATT Inc is 1.33 times less risky than Compania Cervecerias. It trades about -0.03 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.05 per unit of risk. If you would invest  2,058  in ATT Inc on August 30, 2022 and sell it today you would lose (146.00)  from holding ATT Inc or give up 7.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Compania Cervecerias Unidas

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in December 2022.

ATT Price Channel

Compania Cervecerias 
Compania Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Compania Cervecerias may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Compania Price Channel

ATT and Compania Cervecerias Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Compania Cervecerias

The main advantage of trading using opposite ATT and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.
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The idea behind ATT Inc 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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