Correlation Between Lojas Renner and Ambev SA

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

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

Diversification Opportunities for Lojas Renner and Ambev SA

-0.24

Correlation Coefficient

Lojas Renner  Ambev SA

Very good diversification

The 3 months correlation between Lojas and Ambev is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and Lojas Renner 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 Lojas Renner SA 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 has no effect on the direction of Lojas Renner i.e., Lojas Renner and Ambev SA go up and down completely randomly.

Pair Corralation between Lojas Renner and Ambev SA

Assuming the 90 days trading horizon Lojas Renner is expected to generate 2.86 times less return on investment than Ambev SA. In addition to that, Lojas Renner is 1.66 times more volatile than Ambev SA. It trades about 0.0 of its total potential returns per unit of risk. Ambev SA is currently generating about 0.0 per unit of volatility. If you would invest  1,277  in Ambev SA on September 23, 2024 and sell it today you would lose (54.00) from holding Ambev SA or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Lojas Renner SA  vs.  Ambev SA

Lojas Renner SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lojas Renner SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Ambev SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ambev SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lojas Renner and Ambev SA

The main advantage of trading using opposite Lojas Renner and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Renner 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 Lojas Renner SA and Ambev SA 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.