Correlation Between Cia De and Prosegur
Can any of the company-specific risk be diversified away by investing in both Cia De and Prosegur 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 Prosegur 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 Prosegur, you can compare the effects of market volatilities on Cia De and Prosegur 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 Prosegur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Prosegur.
Diversification Opportunities for Cia De and Prosegur
Good diversification
The 3 months correlation between Cia and Prosegur is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Distribucion and Prosegur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosegur 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 Prosegur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosegur has no effect on the direction of Cia De i.e., Cia De and Prosegur go up and down completely randomly.
Pair Corralation between Cia De and Prosegur
Assuming the 90 days trading horizon Cia de Distribucion is expected to under-perform the Prosegur. But the stock apears to be less risky and, when comparing its historical volatility, Cia de Distribucion is 2.35 times less risky than Prosegur. The stock trades about -0.04 of its potential returns per unit of risk. The Prosegur is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Prosegur on December 4, 2024 and sell it today you would earn a total of 31.00 from holding Prosegur or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cia de Distribucion vs. Prosegur
Performance |
| Timeline |
| Cia de Distribucion |
| Prosegur |
Cia De and Prosegur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cia De and Prosegur
The main advantage of trading using opposite Cia De and Prosegur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De position performs unexpectedly, Prosegur 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 Prosegur will offset losses from the drop in Prosegur's long position.The idea behind Cia de Distribucion and Prosegur 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.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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