Correlation Between International Consolidated and Plasticos Compuestos
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Plasticos Compuestos 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 International Consolidated and Plasticos Compuestos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Plasticos Compuestos SA, you can compare the effects of market volatilities on International Consolidated and Plasticos Compuestos 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 International Consolidated with a short position of Plasticos Compuestos. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Plasticos Compuestos.
Diversification Opportunities for International Consolidated and Plasticos Compuestos
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Plasticos is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Plasticos Compuestos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plasticos Compuestos and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Plasticos Compuestos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plasticos Compuestos has no effect on the direction of International Consolidated i.e., International Consolidated and Plasticos Compuestos go up and down completely randomly.
Pair Corralation between International Consolidated and Plasticos Compuestos
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.48 times more return on investment than Plasticos Compuestos. However, International Consolidated is 1.48 times more volatile than Plasticos Compuestos SA. It trades about 0.35 of its potential returns per unit of risk. Plasticos Compuestos SA is currently generating about 0.34 per unit of risk. If you would invest 258.00 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 44.00 from holding International Consolidated Airlines or generate 17.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Plasticos Compuestos SA
Performance |
| Timeline |
| International Consolidated |
| Plasticos Compuestos |
International Consolidated and Plasticos Compuestos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Plasticos Compuestos
The main advantage of trading using opposite International Consolidated and Plasticos Compuestos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Plasticos Compuestos 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 Plasticos Compuestos will offset losses from the drop in Plasticos Compuestos' long position.| International Consolidated vs. Cox ABG Group | International Consolidated vs. Tier1 Technology SA | International Consolidated vs. Ibervalles SOCIMI SA | International Consolidated vs. Miciso Real Estate |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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