Correlation Between CIE Automotive and Acerinox
Can any of the company-specific risk be diversified away by investing in both CIE Automotive and Acerinox 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 CIE Automotive and Acerinox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIE Automotive SA and Acerinox, you can compare the effects of market volatilities on CIE Automotive and Acerinox 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 CIE Automotive with a short position of Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIE Automotive and Acerinox.
Diversification Opportunities for CIE Automotive and Acerinox
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CIE and Acerinox is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CIE Automotive SA and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and CIE Automotive 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 CIE Automotive SA are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of CIE Automotive i.e., CIE Automotive and Acerinox go up and down completely randomly.
Pair Corralation between CIE Automotive and Acerinox
Assuming the 90 days trading horizon CIE Automotive SA is expected to under-perform the Acerinox. But the stock apears to be less risky and, when comparing its historical volatility, CIE Automotive SA is 1.13 times less risky than Acerinox. The stock trades about -0.01 of its potential returns per unit of risk. The Acerinox is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 894.00 in Acerinox on August 28, 2024 and sell it today you would earn a total of 59.00 from holding Acerinox or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIE Automotive SA vs. Acerinox
Performance |
| Timeline |
| CIE Automotive SA |
| Acerinox |
CIE Automotive and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIE Automotive and Acerinox
The main advantage of trading using opposite CIE Automotive and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIE Automotive position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| CIE Automotive vs. Viscofan | CIE Automotive vs. Gestamp Automocion SA | CIE Automotive vs. ENCE Energa y | CIE Automotive vs. Acerinox |
| Acerinox vs. ACS Actividades de | Acerinox vs. ArcelorMittal SA | Acerinox vs. Mapfre | Acerinox vs. Ferrovial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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