Correlation Between Carboclor and Fiplasto

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Can any of the company-specific risk be diversified away by investing in both Carboclor and Fiplasto 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 Carboclor and Fiplasto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carboclor and Fiplasto SA, you can compare the effects of market volatilities on Carboclor and Fiplasto 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 Carboclor with a short position of Fiplasto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carboclor and Fiplasto.

Diversification Opportunities for Carboclor and Fiplasto

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Carboclor and Fiplasto is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carboclor and Fiplasto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiplasto SA and Carboclor 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 Carboclor are associated (or correlated) with Fiplasto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiplasto SA has no effect on the direction of Carboclor i.e., Carboclor and Fiplasto go up and down completely randomly.

Pair Corralation between Carboclor and Fiplasto

Assuming the 90 days trading horizon Carboclor is expected to under-perform the Fiplasto. In addition to that, Carboclor is 1.04 times more volatile than Fiplasto SA. It trades about -0.22 of its total potential returns per unit of risk. Fiplasto SA is currently generating about 0.3 per unit of volatility. If you would invest  31,950  in Fiplasto SA on September 24, 2024 and sell it today you would earn a total of  5,500  from holding Fiplasto SA or generate 17.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Carboclor  vs.  Fiplasto SA

 Performance 
       Timeline  
Carboclor 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Carboclor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carboclor sustained solid returns over the last few months and may actually be approaching a breakup point.
Fiplasto SA 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fiplasto SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiplasto sustained solid returns over the last few months and may actually be approaching a breakup point.

Carboclor and Fiplasto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carboclor and Fiplasto

The main advantage of trading using opposite Carboclor and Fiplasto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carboclor position performs unexpectedly, Fiplasto 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 Fiplasto will offset losses from the drop in Fiplasto's long position.
The idea behind Carboclor and Fiplasto 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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