Correlation Between Compania Industrial and Manufactura
Can any of the company-specific risk be diversified away by investing in both Compania Industrial and Manufactura 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 Compania Industrial and Manufactura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Industrial Textil and Manufactura De Metales, you can compare the effects of market volatilities on Compania Industrial and Manufactura 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 Compania Industrial with a short position of Manufactura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Industrial and Manufactura.
Diversification Opportunities for Compania Industrial and Manufactura
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compania and Manufactura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compania Industrial Textil and Manufactura De Metales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manufactura De Metales and Compania Industrial 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 Compania Industrial Textil are associated (or correlated) with Manufactura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manufactura De Metales has no effect on the direction of Compania Industrial i.e., Compania Industrial and Manufactura go up and down completely randomly.
Pair Corralation between Compania Industrial and Manufactura
If you would invest (100.00) in Manufactura De Metales on August 31, 2024 and sell it today you would earn a total of 100.00 from holding Manufactura De Metales or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Industrial Textil vs. Manufactura De Metales
Performance |
| Timeline |
| Compania Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Manufactura De Metales |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Compania Industrial and Manufactura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Industrial and Manufactura
The main advantage of trading using opposite Compania Industrial and Manufactura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Industrial position performs unexpectedly, Manufactura 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 Manufactura will offset losses from the drop in Manufactura's long position.The idea behind Compania Industrial Textil and Manufactura De Metales 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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