Correlation Between Cia De and Libertas 7

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Can any of the company-specific risk be diversified away by investing in both Cia De and Libertas 7 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 Cia De and Libertas 7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cia de Distribucion and Libertas 7 SA, you can compare the effects of market volatilities on Cia De and Libertas 7 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 Cia De with a short position of Libertas 7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Libertas 7.

Diversification Opportunities for Cia De and Libertas 7

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cia and Libertas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Distribucion and Libertas 7 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libertas 7 SA and Cia De 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 Cia de Distribucion are associated (or correlated) with Libertas 7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libertas 7 SA has no effect on the direction of Cia De i.e., Cia De and Libertas 7 go up and down completely randomly.

Pair Corralation between Cia De and Libertas 7

Assuming the 90 days trading horizon Cia De is expected to generate 3.28 times less return on investment than Libertas 7. But when comparing it to its historical volatility, Cia de Distribucion is 3.32 times less risky than Libertas 7. It trades about 0.1 of its potential returns per unit of risk. Libertas 7 SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Libertas 7 SA on September 25, 2024 and sell it today you would earn a total of  79.00  from holding Libertas 7 SA or generate 79.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy91.27%
ValuesDaily Returns

Cia de Distribucion  vs.  Libertas 7 SA

 Performance 
       Timeline  
Cia de Distribucion 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Distribucion are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Cia De may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Libertas 7 SA 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Libertas 7 SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Libertas 7 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cia De and Libertas 7 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cia De and Libertas 7

The main advantage of trading using opposite Cia De and Libertas 7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De position performs unexpectedly, Libertas 7 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 Libertas 7 will offset losses from the drop in Libertas 7's long position.
The idea behind Cia de Distribucion and Libertas 7 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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