Correlation Between Vale SA and Industrias Penoles
Can any of the company-specific risk be diversified away by investing in both Vale SA and Industrias Penoles 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 Vale SA and Industrias Penoles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Industrias Penoles Sab, you can compare the effects of market volatilities on Vale SA and Industrias Penoles 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 Vale SA with a short position of Industrias Penoles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Industrias Penoles.
Diversification Opportunities for Vale SA and Industrias Penoles
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vale and Industrias is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Industrias Penoles Sab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Penoles Sab and Vale 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 Vale SA are associated (or correlated) with Industrias Penoles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Penoles Sab has no effect on the direction of Vale SA i.e., Vale SA and Industrias Penoles go up and down completely randomly.
Pair Corralation between Vale SA and Industrias Penoles
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Industrias Penoles. But the stock apears to be less risky and, when comparing its historical volatility, Vale SA is 2.33 times less risky than Industrias Penoles. The stock trades about -0.05 of its potential returns per unit of risk. The Industrias Penoles Sab is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,370 in Industrias Penoles Sab on September 12, 2024 and sell it today you would earn a total of 180.00 from holding Industrias Penoles Sab or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA vs. Industrias Penoles Sab
Performance |
| Timeline |
| Vale SA |
| Industrias Penoles Sab |
Vale SA and Industrias Penoles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Industrias Penoles
The main advantage of trading using opposite Vale SA and Industrias Penoles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Industrias Penoles 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 Industrias Penoles will offset losses from the drop in Industrias Penoles' long position.| Vale SA vs. IMAGIN MEDICAL INC | Vale SA vs. Daido Steel Co | Vale SA vs. KRAKATAU STEEL B | Vale SA vs. Mitsui Chemicals |
| Industrias Penoles vs. AEGEAN AIRLINES | Industrias Penoles vs. Taylor Morrison Home | Industrias Penoles vs. Autohome ADR | Industrias Penoles vs. International Consolidated Airlines |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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