Correlation Between Labiana Health and Tubos Reunidos

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Can any of the company-specific risk be diversified away by investing in both Labiana Health and Tubos Reunidos 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 Labiana Health and Tubos Reunidos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labiana Health SA and Tubos Reunidos SA, you can compare the effects of market volatilities on Labiana Health and Tubos Reunidos 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 Labiana Health with a short position of Tubos Reunidos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labiana Health and Tubos Reunidos.

Diversification Opportunities for Labiana Health and Tubos Reunidos

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Labiana and Tubos is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Labiana Health SA and Tubos Reunidos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubos Reunidos SA and Labiana Health 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 Labiana Health SA are associated (or correlated) with Tubos Reunidos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubos Reunidos SA has no effect on the direction of Labiana Health i.e., Labiana Health and Tubos Reunidos go up and down completely randomly.

Pair Corralation between Labiana Health and Tubos Reunidos

Assuming the 90 days trading horizon Labiana Health SA is expected to generate 0.94 times more return on investment than Tubos Reunidos. However, Labiana Health SA is 1.06 times less risky than Tubos Reunidos. It trades about 0.12 of its potential returns per unit of risk. Tubos Reunidos SA is currently generating about 0.02 per unit of risk. If you would invest  186.00  in Labiana Health SA on September 10, 2024 and sell it today you would earn a total of  13.00  from holding Labiana Health SA or generate 6.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Labiana Health SA  vs.  Tubos Reunidos SA

 Performance 
       Timeline  
Labiana Health SA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Labiana Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Tubos Reunidos SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tubos Reunidos SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Labiana Health and Tubos Reunidos Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Labiana Health and Tubos Reunidos

The main advantage of trading using opposite Labiana Health and Tubos Reunidos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labiana Health position performs unexpectedly, Tubos Reunidos 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 Tubos Reunidos will offset losses from the drop in Tubos Reunidos' long position.
The idea behind Labiana Health SA and Tubos Reunidos 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.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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