Correlation Between Ferrum SA and Consultatio
Can any of the company-specific risk be diversified away by investing in both Ferrum SA and Consultatio 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 Consultatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrum SA and Consultatio SA, you can compare the effects of market volatilities on Ferrum SA and Consultatio 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 Consultatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrum SA and Consultatio.
Diversification Opportunities for Ferrum SA and Consultatio
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ferrum and Consultatio is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ferrum SA and Consultatio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consultatio 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 Consultatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consultatio SA has no effect on the direction of Ferrum SA i.e., Ferrum SA and Consultatio go up and down completely randomly.
Pair Corralation between Ferrum SA and Consultatio
Assuming the 90 days trading horizon Ferrum SA is expected to generate 1.22 times less return on investment than Consultatio. In addition to that, Ferrum SA is 1.06 times more volatile than Consultatio SA. It trades about 0.09 of its total potential returns per unit of risk. Consultatio SA is currently generating about 0.11 per unit of volatility. If you would invest 242,000 in Consultatio SA on October 24, 2024 and sell it today you would earn a total of 11,000 from holding Consultatio SA or generate 4.55% 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. Consultatio SA
Performance |
| Timeline |
| Ferrum SA |
| Consultatio SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Ferrum SA and Consultatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrum SA and Consultatio
The main advantage of trading using opposite Ferrum SA and Consultatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrum SA position performs unexpectedly, Consultatio 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 Consultatio will offset losses from the drop in Consultatio's long position.The idea behind Ferrum SA and Consultatio 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.| Consultatio vs. Transportadora de Gas | Consultatio vs. Compania de Transporte | Consultatio vs. Agrometal SAI | Consultatio vs. United States Steel |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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