Correlation Between Masisa and Cuprum
Can any of the company-specific risk be diversified away by investing in both Masisa and Cuprum 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 Masisa and Cuprum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masisa and Cuprum, you can compare the effects of market volatilities on Masisa and Cuprum 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 Masisa with a short position of Cuprum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masisa and Cuprum.
Diversification Opportunities for Masisa and Cuprum
Average diversification
The 3 months correlation between Masisa and Cuprum is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Masisa and Cuprum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuprum and Masisa 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 Masisa are associated (or correlated) with Cuprum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuprum has no effect on the direction of Masisa i.e., Masisa and Cuprum go up and down completely randomly.
Pair Corralation between Masisa and Cuprum
Assuming the 90 days trading horizon Masisa is expected to under-perform the Cuprum. In addition to that, Masisa is 1.1 times more volatile than Cuprum. It trades about -0.04 of its total potential returns per unit of risk. Cuprum is currently generating about 0.1 per unit of volatility. If you would invest 3,065 in Cuprum on August 31, 2024 and sell it today you would earn a total of 2,174 from holding Cuprum or generate 70.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.6% |
| Values | Daily Returns |
Masisa vs. Cuprum
Performance |
| Timeline |
| Masisa |
| Cuprum |
Masisa and Cuprum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masisa and Cuprum
The main advantage of trading using opposite Masisa and Cuprum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masisa position performs unexpectedly, Cuprum 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 Cuprum will offset losses from the drop in Cuprum's long position.| Masisa vs. Energia Latina SA | Masisa vs. Embotelladora Andina SA | Masisa vs. Administradora Americana de | Masisa vs. Las Condes |
| Cuprum vs. Administradora Americana de | Cuprum vs. Salfacorp | Cuprum vs. Schwager | Cuprum vs. HMC SA ADMINISTRADORA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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