Correlation Between Fras Le and Tecnisa SA
Can any of the company-specific risk be diversified away by investing in both Fras Le and Tecnisa 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 Fras Le and Tecnisa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Tecnisa SA, you can compare the effects of market volatilities on Fras Le and Tecnisa 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 Fras Le with a short position of Tecnisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Tecnisa SA.
Diversification Opportunities for Fras Le and Tecnisa SA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fras and Tecnisa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Tecnisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnisa SA and Fras Le 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 Fras le SA are associated (or correlated) with Tecnisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnisa SA has no effect on the direction of Fras Le i.e., Fras Le and Tecnisa SA go up and down completely randomly.
Pair Corralation between Fras Le and Tecnisa SA
Assuming the 90 days trading horizon Fras le SA is expected to under-perform the Tecnisa SA. But the stock apears to be less risky and, when comparing its historical volatility, Fras le SA is 1.94 times less risky than Tecnisa SA. The stock trades about -0.09 of its potential returns per unit of risk. The Tecnisa SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Tecnisa SA on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Tecnisa SA or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Tecnisa SA
Performance |
| Timeline |
| Fras le SA |
| Tecnisa SA |
Fras Le and Tecnisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Tecnisa SA
The main advantage of trading using opposite Fras Le and Tecnisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Tecnisa 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 Tecnisa SA will offset losses from the drop in Tecnisa SA's long position.| Fras Le vs. Engie Brasil Energia | Fras Le vs. Energisa SA | Fras Le vs. Clave Indices De | Fras Le vs. BTG Pactual Logstica |
| Tecnisa SA vs. Engie Brasil Energia | Tecnisa SA vs. Fras le SA | Tecnisa SA vs. Energisa SA | Tecnisa SA vs. Clave Indices De |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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