Correlation Between Ambev SA and Stratasys

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

Diversification Opportunities for Ambev SA and Stratasys

-0.42

Correlation Coefficient

Ambev SA  Stratasys

Very good diversification

The 3 months correlation between Ambev and Stratasys is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Ambev SA i.e., Ambev SA and Stratasys go up and down completely randomly.

Pair Corralation between Ambev SA and Stratasys

Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Stratasys. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 2.43 times less risky than Stratasys. The stock trades about -0.06 of its potential returns per unit of risk. The Stratasys is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  742.00  in Stratasys on September 16, 2024 and sell it today you would earn a total of  266.00  from holding Stratasys or generate 35.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ambev SA ADR  vs.  Stratasys

Ambev SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambev SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Stratasys

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambev SA and Stratasys

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

The idea behind Ambev SA ADR and Stratasys 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 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.