Correlation Between Longvie SA and Capex SA
Can any of the company-specific risk be diversified away by investing in both Longvie SA and Capex 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 Longvie SA and Capex SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longvie SA and Capex SA, you can compare the effects of market volatilities on Longvie SA and Capex 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 Longvie SA with a short position of Capex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longvie SA and Capex SA.
Diversification Opportunities for Longvie SA and Capex SA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Longvie and Capex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Longvie SA and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA and Longvie SA 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 Longvie SA are associated (or correlated) with Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Longvie SA i.e., Longvie SA and Capex SA go up and down completely randomly.
Pair Corralation between Longvie SA and Capex SA
Assuming the 90 days trading horizon Longvie SA is expected to generate 1.29 times less return on investment than Capex SA. But when comparing it to its historical volatility, Longvie SA is 1.17 times less risky than Capex SA. It trades about 0.1 of its potential returns per unit of risk. Capex SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 570,600 in Capex SA on September 1, 2024 and sell it today you would earn a total of 322,400 from holding Capex SA or generate 56.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longvie SA vs. Capex SA
Performance |
| Timeline |
| Longvie SA |
| Capex SA |
Longvie SA and Capex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longvie SA and Capex SA
The main advantage of trading using opposite Longvie SA and Capex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longvie SA position performs unexpectedly, Capex 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 Capex SA will offset losses from the drop in Capex SA's long position.| Longvie SA vs. Fiplasto SA | Longvie SA vs. American Express Co | Longvie SA vs. United States Steel | Longvie SA vs. Pfizer Inc |
| Capex SA vs. American Express Co | Capex SA vs. United States Steel | Capex SA vs. Pfizer Inc | Capex SA vs. Distribuidora de Gas |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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