Correlation Between Plasticos Compuestos and Vale SA
Can any of the company-specific risk be diversified away by investing in both Plasticos Compuestos and Vale 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 Plasticos Compuestos and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plasticos Compuestos SA and Vale SA, you can compare the effects of market volatilities on Plasticos Compuestos and Vale 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 Plasticos Compuestos with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plasticos Compuestos and Vale SA.
Diversification Opportunities for Plasticos Compuestos and Vale SA
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Plasticos and Vale is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Plasticos Compuestos SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Plasticos Compuestos 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 Plasticos Compuestos SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Plasticos Compuestos i.e., Plasticos Compuestos and Vale SA go up and down completely randomly.
Pair Corralation between Plasticos Compuestos and Vale SA
Assuming the 90 days trading horizon Plasticos Compuestos SA is expected to generate 0.68 times more return on investment than Vale SA. However, Plasticos Compuestos SA is 1.48 times less risky than Vale SA. It trades about 0.34 of its potential returns per unit of risk. Vale SA is currently generating about -0.12 per unit of risk. If you would invest 91.00 in Plasticos Compuestos SA on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Plasticos Compuestos SA or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Plasticos Compuestos SA vs. Vale SA
Performance |
| Timeline |
| Plasticos Compuestos |
| Vale SA |
Plasticos Compuestos and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plasticos Compuestos and Vale SA
The main advantage of trading using opposite Plasticos Compuestos and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plasticos Compuestos position performs unexpectedly, Vale 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 Vale SA will offset losses from the drop in Vale SA's long position.| Plasticos Compuestos vs. Petroleo Brasileiro SA | Plasticos Compuestos vs. Vale SA | Plasticos Compuestos vs. Banco Santander | Plasticos Compuestos vs. Telefonica |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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