Correlation Between Communication Services and Ambev SA

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

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

Diversification Opportunities for Communication Services and Ambev SA

0.44

Correlation Coefficient

Communication Services  Ambev SA

Very weak diversification

The 3 months correlation between Communication and Ambev is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select 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 Communication Services 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 Communication Services Select 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 Communication Services i.e., Communication Services and Ambev SA go up and down completely randomly.

Pair Corralation between Communication Services and Ambev SA

Considering the 90-day investment horizon Communication Services Select is expected to generate 0.54 times more return on investment than Ambev SA. However, Communication Services Select is 1.84 times less risky than Ambev SA. It trades about 0.13 of its potential returns per unit of risk. Ambev SA ADR is currently generating about 0.07 per unit of risk. If you would invest  10,778  in Communication Services Select on August 4, 2025 and sell it today you would earn a total of  703.00  from holding Communication Services Select or generate 6.52% return on investment over 90 days.

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

Communication Services Select  vs.  Ambev SA ADR

Communication Services

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Services Select are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Communication Services may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Ambev SA ADR

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Ambev SA is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Communication Services and Ambev SA

The main advantage of trading using opposite Communication Services and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Services 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 Communication Services Select 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.