Correlation Between Ambev SA and US GoldMining

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

Diversification Opportunities for Ambev SA and US GoldMining

-0.83

Correlation Coefficient

Ambev SA  US GoldMining

Pay attention - limited upside

The 3 months correlation between Ambev and USGO is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and US GoldMining Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Common 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 US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Common has no effect on the direction of Ambev SA i.e., Ambev SA and US GoldMining go up and down completely randomly.

Pair Corralation between Ambev SA and US GoldMining

Given the investment horizon of 90 days Ambev SA ADR is expected to generate 0.87 times more return on investment than US GoldMining. However, Ambev SA ADR is 1.15 times less risky than US GoldMining. It trades about 0.1 of its potential returns per unit of risk. US GoldMining Common is currently generating about 0.0 per unit of risk. If you would invest  225.00  in Ambev SA ADR on June 9, 2024 and sell it today you would earn a total of  8.00  from holding Ambev SA ADR or generate 3.56% return on investment over 90 days.

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

Ambev SA ADR  vs.  US GoldMining Common

Ambev SA ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ambev SA may actually be approaching a critical reversion point that can send shares even higher in October 2024.

US GoldMining Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US GoldMining Common 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 very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ambev SA and US GoldMining

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

The idea behind Ambev SA ADR and US GoldMining Common 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.