Correlation Between Salfacorp and Vina San

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

Diversification Opportunities for Salfacorp and Vina San

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Salfacorp and Vina is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Salfacorp and Vina San Pedro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vina San Pedro and Salfacorp 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 Salfacorp are associated (or correlated) with Vina San. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vina San Pedro has no effect on the direction of Salfacorp i.e., Salfacorp and Vina San go up and down completely randomly.

Pair Corralation between Salfacorp and Vina San

Assuming the 90 days trading horizon Salfacorp is expected to generate 0.17 times more return on investment than Vina San. However, Salfacorp is 5.77 times less risky than Vina San. It trades about -0.15 of its potential returns per unit of risk. Vina San Pedro is currently generating about -0.35 per unit of risk. If you would invest  57,621  in Salfacorp on September 4, 2024 and sell it today you would lose (1,821) from holding Salfacorp or give up 3.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy36.36%
ValuesDaily Returns

Salfacorp  vs.  Vina San Pedro

 Performance 
       Timeline  
Salfacorp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Salfacorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Salfacorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Vina San Pedro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vina San Pedro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Salfacorp and Vina San Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salfacorp and Vina San

The main advantage of trading using opposite Salfacorp and Vina San positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salfacorp position performs unexpectedly, Vina San 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 Vina San will offset losses from the drop in Vina San's long position.
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The idea behind Salfacorp and Vina San Pedro 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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