Correlation Between Capex SA and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Capex SA and Ternium 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 Capex SA and Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capex SA and Ternium SA DRC, you can compare the effects of market volatilities on Capex SA and Ternium 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 Capex SA with a short position of Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capex SA and Ternium SA.
Diversification Opportunities for Capex SA and Ternium SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capex and Ternium is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Capex SA and Ternium SA DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA DRC and Capex 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 Capex SA are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA DRC has no effect on the direction of Capex SA i.e., Capex SA and Ternium SA go up and down completely randomly.
Pair Corralation between Capex SA and Ternium SA
Assuming the 90 days trading horizon Capex SA is expected to generate 1.19 times more return on investment than Ternium SA. However, Capex SA is 1.19 times more volatile than Ternium SA DRC. It trades about 0.13 of its potential returns per unit of risk. Ternium SA DRC is currently generating about 0.03 per unit of risk. If you would invest 68,100 in Capex SA on November 30, 2024 and sell it today you would earn a total of 546,900 from holding Capex SA or generate 803.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capex SA vs. Ternium SA DRC
Performance |
Timeline |
Capex SA |
Ternium SA DRC |
Capex SA and Ternium SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capex SA and Ternium SA
The main advantage of trading using opposite Capex SA and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capex SA position performs unexpectedly, Ternium 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 Ternium SA will offset losses from the drop in Ternium SA's long position.Capex SA vs. Compania de Transporte | ||
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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