Correlation Between Corporacion America and East Africa
Can any of the company-specific risk be diversified away by investing in both Corporacion America and East Africa 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 Corporacion America and East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporacion America Airports and East Africa Metals, you can compare the effects of market volatilities on Corporacion America and East Africa 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 Corporacion America with a short position of East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and East Africa.
Diversification Opportunities for Corporacion America and East Africa
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Corporacion and East is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals and Corporacion America 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 Corporacion America Airports are associated (or correlated) with East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Corporacion America i.e., Corporacion America and East Africa go up and down completely randomly.
Pair Corralation between Corporacion America and East Africa
Given the investment horizon of 90 days Corporacion America is expected to generate 24.17 times less return on investment than East Africa. But when comparing it to its historical volatility, Corporacion America Airports is 8.13 times less risky than East Africa. It trades about 0.02 of its potential returns per unit of risk. East Africa Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6.26 in East Africa Metals on September 1, 2024 and sell it today you would earn a total of 4.74 from holding East Africa Metals or generate 75.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Corporacion America Airports vs. East Africa Metals
Performance |
| Timeline |
| Corporacion America |
| East Africa Metals |
Corporacion America and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporacion America and East Africa
The main advantage of trading using opposite Corporacion America and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| Corporacion America vs. Grupo Aeroportuario del | Corporacion America vs. Grupo Aeroportuario del | Corporacion America vs. AerSale Corp | Corporacion America vs. Flughafen Zrich AG |
| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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