Correlation Between Anadolu Efes and Ambev SA

Can any of the company-specific risk be diversified away by investing in both Anadolu Efes and Ambev SA 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 Anadolu Efes and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anadolu Efes Biracilik and Ambev SA ADR, you can compare the effects of market volatilities on Anadolu Efes and Ambev SA 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 Anadolu Efes with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anadolu Efes and Ambev SA.

Diversification Opportunities for Anadolu Efes and Ambev SA

-0.48

Correlation Coefficient

Anadolu Efes  Ambev SA

Very good diversification

The 3 months correlation between Anadolu and Ambev is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Anadolu Efes Biracilik and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Anadolu Efes 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 Anadolu Efes Biracilik are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Anadolu Efes i.e., Anadolu Efes and Ambev SA go up and down completely randomly.

Pair Corralation between Anadolu Efes and Ambev SA

Assuming the 90 days horizon Anadolu Efes Biracilik is expected to generate 1.5 times more return on investment than Ambev SA. However, Anadolu Efes is 1.5 times more volatile than Ambev SA ADR. It trades about 0.07 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.16 per unit of risk. If you would invest  121.00  in Anadolu Efes Biracilik on September 27, 2024 and sell it today you would earn a total of  15.00  from holding Anadolu Efes Biracilik or generate 12.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Anadolu Efes Biracilik  vs.  Ambev SA ADR

Anadolu Efes Biracilik

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anadolu Efes Biracilik are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Anadolu Efes showed solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Anadolu Efes and Ambev SA

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

The idea behind Anadolu Efes Biracilik and Ambev SA ADR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.