Correlation Between Ferrum SA and Molinos Juan
Can any of the company-specific risk be diversified away by investing in both Ferrum SA and Molinos Juan 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 Molinos Juan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrum SA and Molinos Juan Semino, you can compare the effects of market volatilities on Ferrum SA and Molinos Juan 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 Molinos Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrum SA and Molinos Juan.
Diversification Opportunities for Ferrum SA and Molinos Juan
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ferrum and Molinos is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ferrum SA and Molinos Juan Semino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Juan Semino 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 Molinos Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Juan Semino has no effect on the direction of Ferrum SA i.e., Ferrum SA and Molinos Juan go up and down completely randomly.
Pair Corralation between Ferrum SA and Molinos Juan
Assuming the 90 days trading horizon Ferrum SA is expected to generate 0.59 times more return on investment than Molinos Juan. However, Ferrum SA is 1.71 times less risky than Molinos Juan. It trades about 0.09 of its potential returns per unit of risk. Molinos Juan Semino is currently generating about -0.09 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrum SA vs. Molinos Juan Semino
Performance |
| Timeline |
| Ferrum SA |
| Molinos Juan Semino |
Ferrum SA and Molinos Juan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrum SA and Molinos Juan
The main advantage of trading using opposite Ferrum SA and Molinos Juan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrum SA position performs unexpectedly, Molinos Juan 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 Molinos Juan will offset losses from the drop in Molinos Juan's long position.The idea behind Ferrum SA and Molinos Juan Semino 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.| Molinos Juan vs. Harmony Gold Mining | Molinos Juan vs. Agrometal SAI | Molinos Juan vs. United States Steel | Molinos Juan vs. Compania de Transporte |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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