Correlation Between Faes Farma and Cia De
Can any of the company-specific risk be diversified away by investing in both Faes Farma and Cia De 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 Faes Farma and Cia De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faes Farma SA and Cia de Distribucion, you can compare the effects of market volatilities on Faes Farma and Cia De 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 Faes Farma with a short position of Cia De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faes Farma and Cia De.
Diversification Opportunities for Faes Farma and Cia De
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Faes and Cia is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Faes Farma SA and Cia de Distribucion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Distribucion and Faes Farma 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 Faes Farma SA are associated (or correlated) with Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Distribucion has no effect on the direction of Faes Farma i.e., Faes Farma and Cia De go up and down completely randomly.
Pair Corralation between Faes Farma and Cia De
Assuming the 90 days trading horizon Faes Farma is expected to generate 3.98 times less return on investment than Cia De. In addition to that, Faes Farma is 1.05 times more volatile than Cia de Distribucion. It trades about 0.02 of its total potential returns per unit of risk. Cia de Distribucion is currently generating about 0.09 per unit of volatility. If you would invest 2,230 in Cia de Distribucion on August 29, 2024 and sell it today you would earn a total of 816.00 from holding Cia de Distribucion or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faes Farma SA vs. Cia de Distribucion
Performance |
| Timeline |
| Faes Farma SA |
| Cia de Distribucion |
Faes Farma and Cia De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faes Farma and Cia De
The main advantage of trading using opposite Faes Farma and Cia De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faes Farma position performs unexpectedly, Cia De 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 Cia De will offset losses from the drop in Cia De's long position.| Faes Farma vs. ENCE Energa y | Faes Farma vs. Viscofan | Faes Farma vs. Vidrala SA | Faes Farma vs. Ebro Foods |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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