Correlation Between Ledesma SAAI and International Business

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

Diversification Opportunities for Ledesma SAAI and International Business

LedesmaInternationalDiversified AwayLedesmaInternationalDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ledesma and International is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ledesma SAAI and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Ledesma SAAI 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 Ledesma SAAI are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Ledesma SAAI i.e., Ledesma SAAI and International Business go up and down completely randomly.

Pair Corralation between Ledesma SAAI and International Business

Assuming the 90 days trading horizon Ledesma SAAI is expected to generate 0.95 times more return on investment than International Business. However, Ledesma SAAI is 1.05 times less risky than International Business. It trades about 0.14 of its potential returns per unit of risk. International Business Machines is currently generating about 0.07 per unit of risk. If you would invest  15,329  in Ledesma SAAI on November 30, 2024 and sell it today you would earn a total of  131,171  from holding Ledesma SAAI or generate 855.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ledesma SAAI  vs.  International Business Machine

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15LEDE IBM
       Timeline  
Ledesma SAAI 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ledesma SAAI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ledesma SAAI may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15JanFebFeb1,3001,3501,4001,4501,5001,5501,6001,6501,700
International Business 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, International Business sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFeb16,00017,00018,00019,00020,00021,000

Ledesma SAAI and International Business Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.58-4.93-3.28-1.620.01.723.445.166.88 0.020.030.040.050.060.070.080.09
JavaScript chart by amCharts 3.21.15LEDE IBM
       Returns  

Pair Trading with Ledesma SAAI and International Business

The main advantage of trading using opposite Ledesma SAAI and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ledesma SAAI position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind Ledesma SAAI and International Business Machines 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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