Correlation Between Haverty Furniture and Compania Cervecerias

Can any of the company-specific risk be diversified away by investing in both Haverty Furniture 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 Haverty Furniture and Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haverty Furniture Companies and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Haverty Furniture 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 Haverty Furniture with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haverty Furniture and Compania Cervecerias.

Diversification Opportunities for Haverty Furniture and Compania Cervecerias

0.11

Correlation Coefficient

Haverty Furniture  Compania Cervecerias

Average diversification

The 3 months correlation between Haverty and Compania is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Haverty Furniture 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 Haverty Furniture Companies 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 Haverty Furniture i.e., Haverty Furniture and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Haverty Furniture and Compania Cervecerias

Considering the 90-day investment horizon Haverty Furniture is expected to generate 3.14 times less return on investment than Compania Cervecerias. In addition to that, Haverty Furniture is 1.51 times more volatile than Compania Cervecerias Unidas. It trades about 0.02 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.11 per unit of volatility. If you would invest  1,085  in Compania Cervecerias Unidas on October 1, 2024 and sell it today you would earn a total of  65.00  from holding Compania Cervecerias Unidas or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Haverty Furniture Companies  vs.  Compania Cervecerias Unidas

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Compania Cervecerias

Risk-Adjusted Performance

0 of 100

Very Weak

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 comparatively stable fundamental indicators, Compania Cervecerias is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Haverty Furniture and Compania Cervecerias

The main advantage of trading using opposite Haverty Furniture and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture 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.

The idea behind Haverty Furniture Companies 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.