Correlation Between Comvex SA and IAR SA
Can any of the company-specific risk be diversified away by investing in both Comvex SA and IAR 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 Comvex SA and IAR SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comvex SA and IAR SA, you can compare the effects of market volatilities on Comvex SA and IAR 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 Comvex SA with a short position of IAR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comvex SA and IAR SA.
Diversification Opportunities for Comvex SA and IAR SA
Very weak diversification
The 3 months correlation between Comvex and IAR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Comvex SA and IAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR SA and Comvex 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 Comvex SA are associated (or correlated) with IAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR SA has no effect on the direction of Comvex SA i.e., Comvex SA and IAR SA go up and down completely randomly.
Pair Corralation between Comvex SA and IAR SA
Assuming the 90 days trading horizon Comvex SA is expected to under-perform the IAR SA. In addition to that, Comvex SA is 2.5 times more volatile than IAR SA. It trades about -0.04 of its total potential returns per unit of risk. IAR SA is currently generating about -0.07 per unit of volatility. If you would invest 1,350 in IAR SA on August 28, 2024 and sell it today you would lose (85.00) from holding IAR SA or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comvex SA vs. IAR SA
Performance |
| Timeline |
| Comvex SA |
| IAR SA |
Comvex SA and IAR SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comvex SA and IAR SA
The main advantage of trading using opposite Comvex SA and IAR SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comvex SA position performs unexpectedly, IAR 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 IAR SA will offset losses from the drop in IAR SA's long position.The idea behind Comvex SA and IAR 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.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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