Correlation Between Ferrum SA and Capex SA
Can any of the company-specific risk be diversified away by investing in both Ferrum SA and Capex 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 Ferrum SA and Capex SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrum SA and Capex SA, you can compare the effects of market volatilities on Ferrum SA and Capex 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 Ferrum SA with a short position of Capex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrum SA and Capex SA.
Diversification Opportunities for Ferrum SA and Capex SA
Pay attention - limited upside
The 3 months correlation between Ferrum and Capex is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ferrum SA and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA and Ferrum 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 Ferrum SA are associated (or correlated) with Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Ferrum SA i.e., Ferrum SA and Capex SA go up and down completely randomly.
Pair Corralation between Ferrum SA and Capex SA
Assuming the 90 days trading horizon Ferrum SA is expected to generate 0.58 times more return on investment than Capex SA. However, Ferrum SA is 1.71 times less risky than Capex SA. It trades about 0.09 of its potential returns per unit of risk. Capex SA is currently generating about -0.02 per unit of risk. If you would invest 4,100 in Ferrum SA on October 24, 2024 and sell it today you would earn a total of 145.00 from holding Ferrum SA or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrum SA vs. Capex SA
Performance |
| Timeline |
| Ferrum SA |
| Capex SA |
Ferrum SA and Capex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrum SA and Capex SA
The main advantage of trading using opposite Ferrum SA and Capex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrum SA position performs unexpectedly, Capex 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 Capex SA will offset losses from the drop in Capex SA's long position.The idea behind Ferrum SA and Capex 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.| Capex SA vs. Agrometal SAI | Capex SA vs. Harmony Gold Mining | Capex SA vs. United States Steel | Capex SA vs. Telecom Argentina |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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