Correlation Between Ambev SA and 30040WAL2

Can any of the company-specific risk be diversified away by investing in both Ambev SA and 30040WAL2 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 30040WAL2 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 ES 255 15 MAR 31, you can compare the effects of market volatilities on Ambev SA and 30040WAL2 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 30040WAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and 30040WAL2.

Diversification Opportunities for Ambev SA and 30040WAL2

-0.09

Correlation Coefficient

Ambev SA  30040WAL2

Good diversification

The 3 months correlation between Ambev and 30040WAL2 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and ES 255 15 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES 255 15 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 30040WAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES 255 15 has no effect on the direction of Ambev SA i.e., Ambev SA and 30040WAL2 go up and down completely randomly.

Pair Corralation between Ambev SA and 30040WAL2

Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.89 times more return on investment than 30040WAL2. However, Ambev SA ADR is 1.12 times less risky than 30040WAL2. It trades about 0.01 of its potential returns per unit of risk. ES 255 15 MAR 31 is currently generating about -0.06 per unit of risk. If you would invest  231.00  in Ambev SA ADR on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Ambev SA ADR or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Ambev SA ADR  vs.  ES 255 15 MAR 31

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 fairly stable technical and fundamental indicators, Ambev SA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ES 255 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ES 255 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ES 255 15 MAR 31 investors.

Pair Trading with Ambev SA and 30040WAL2

The main advantage of trading using opposite Ambev SA and 30040WAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA position performs unexpectedly, 30040WAL2 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 30040WAL2 will offset losses from the drop in 30040WAL2's long position.

The idea behind Ambev SA ADR and ES 255 15 MAR 31 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.

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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.